Exam 12: Reporting and Analyzing Cash Flows

Information to prepare the statement of cash flows usually comes from three sources: (1)______________, (2)_ and (3)__________.

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(Short Answer)

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Question 1

Correct Answer:

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Comparative balance sheets,current income statement,additional information

Depreciation expense is not reported on the statement of cash flows when the direct method is used.

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(True/False)

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Question 2

Correct Answer:

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True

The following information is available for the Arthur Corporation: Additional Information: (1)There was no gain or loss on the sales of the long-term investments,nor on the bonds retired. (2)Old equipment with an original cost of $37,550 was sold for $2,100 cash. (3)New equipment was purchased for $67,550 cash. (4)Cash dividends of $33,600 were paid. (5)Additional shares of stock were issued for cash. Prepare a complete statement of cash flows for the 2009 calendar year using the direct method.

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Question 3

Correct Answer:

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(a)
$\begin{array}{|l|r|}\hline \text { Cash receipts from customers: } & \\\hline \text { Sales } & \$ 240,000 \\\hline \text { Less: Increase in accounts receivable } & (2,780) \\\hline \text { Cash collected from customers } & \$ 237,220 \\\hline\end{array}$
(b)
$\begin{array}{|l|r|}\hline \text { Cash paid for merchandise inventory: } & \\\hline \text { Cost of goods sold } & \$ 80,900 \\\hline \text { Plus: Increase in inventories } & 11,415 \\\hline \text { Less: Increase in accounts payable } & (24,620) \\\hline \text { Cash paid for inventories } & \$ 67,695 \\\hline\end{array}$
(c)
$\begin{array}{|l|r|}\hline \text { Payments for income taxes: } & \\\hline \text { Income tax expense } & \$ 27,650 \\\hline \text { Less: Increase in incometaxes payable } & (525) \\\hline \text { Cash paid for income taxes } & \$ 27,125 \\\hline\end{array}$
(d)Received from sales of long-term investments: $56,400 - $55,900 = $500
(e)
$\begin{array}{|l|r|}\hline \text { Received from stock issuance: } & \\\hline \text { Increase in common stock } & \$ 21,000 \\\hline \text { Increase in additional paid in capital } & \underline{4,000} \\\hline \text { Total received from stock issuance } & \$ 25,000 \\\hline\end{array}$
(f)
$\begin{array}{|l|r|}\hline \text { Paid to retire bonds: } & \\\hline \text { Bonds payable @ } 12 / 31 / 09 & \$ 66,000 \\\hline \text { Bonds payable @ } 12 / 31 / 10 & (48,750) \\\hline \text { Cash paid to retire bonds } & \$ 17,250 \\\hline\end{array}$
$(a) \begin{array}{|l|r|} \hline \text { Cash receipts from customers: } & \\ \hline \text { Sales } & \$ 240,000 \\ \hline \text { Less: Increase in accounts receivable } & (2,780) \\ \hline \text { Cash collected from customers } & \$ 237,220 \\ \hline \end{array} (b) \begin{array}{|l|r|} \hline \text { Cash paid for merchandise inventory: } & \\ \hline \text { Cost of goods sold } & \$ 80,900 \\ \hline \text { Plus: Increase in inventories } & 11,415 \\ \hline \text { Less: Increase in accounts payable } & (24,620) \\ \hline \text { Cash paid for inventories } & \$ 67,695 \\ \hline \end{array} (c) \begin{array}{|l|r|} \hline \text { Payments for income taxes: } & \\ \hline \text { Income tax expense } & \$ 27,650 \\ \hline \text { Less: Increase in incometaxes payable } & (525) \\ \hline \text { Cash paid for income taxes } & \$ 27,125 \\ \hline \end{array} (d)Received from sales of long-term investments: $56,400 - $55,900 = $500 (e) \begin{array}{|l|r|} \hline \text { Received from stock issuance: } & \\ \hline \text { Increase in common stock } & \$ 21,000 \\ \hline \text { Increase in additional paid in capital } & \underline{4,000} \\ \hline \text { Total received from stock issuance } & \$ 25,000 \\ \hline \end{array} (f) \begin{array}{|l|r|} \hline \text { Paid to retire bonds: } & \\ \hline \text { Bonds payable @ } 12 / 31 / 09 & \$ 66,000 \\ \hline \text { Bonds payable @ } 12 / 31 / 10 & (48,750) \\ \hline \text { Cash paid to retire bonds } & \$ 17,250 \\ \hline \end{array}$

Selected information from Doodle Company's for 2010 is below (in millions):

(Multiple Choice)

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Question 4

Use the following information to calculate the net cash provided or used by financing activities for the Brooks Corporation: (a)Net income,$10,000. (b)Sold common stock for $4,000 cash. (c)Paid cash dividend of $3,000. (d)Paid bond payable,$8,000. (e)Purchased equipment for $12,000 cash.

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Question 5

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the ______________ method is used.

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Question 6

The statement of cash flows is:

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Question 7

Financing activities include receiving cash from issuing debt and receiving cash dividends from investments in other companies' stocks.

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Question 8

A company had total assets of $745,000,total cash flows of $230,000 and cash flows from operations of $50,000.The cash flow on total assets ratio is equal to:

(Multiple Choice)

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Question 9

Managers only use the cash flow statement to evaluate the net cash increase or decrease and do not pay much attention to the details of cash flows from operating activities,cash flows from investing activities and cash flows from financing activities.

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Question 10

Describe the format of the statement of cash flows,including the reporting of significant noncash investing and financing activities.

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Question 11

Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities.

(True/False)

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Question 12

Use the following company information to prepare a schedule of significant noncash investing and financing activities: (a)Sold a building with a book value of $125,000 for $195,000 cash and land with a book value of $32,000 for $65,000 cash. (b)Issued 10,000 shares of $10 par value common stock in exchange for equipment with a market value of $135,000. (c)Retired a $100,000,10% bond by issuing another $100,000,12% bond issue. (d)Acquired land by issuing a ten-year,9%,$44,000 note payable.

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Question 13

Cash flow amounts and their timing should be examined when planning and analyzing operating activities.

(True/False)

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Question 14

The cash flow on total assets ratio is computed by dividing _ by .

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Question 15

Spirit Company,a merchandiser,recently completed its 2010 calendar year .For the year, (1)all sales are credit sales, (2)all credits to Accounts Receivable reflect cash receipts from customers, (3)all purchases of inventory are on credit, (4)all debits to Accounts Payable reflect cash payments for inventory,and (5)Other Expenses are paid in advance and are initially debited to Prepaid Expenses.The company's balance sheet and income statement follow: $Spirit Company,a merchandiser,recently completed its 2010 calendar year .For the year, (1)all sales are credit sales, (2)all credits to Accounts Receivable reflect cash receipts from customers, (3)all purchases of inventory are on credit, (4)all debits to Accounts Payable reflect cash payments for inventory,and (5)Other Expenses are paid in advance and are initially debited to Prepaid Expenses.The company's balance sheet and income statement follow: Additional Information on Year 2010 Transactions a. The loss on the cash sale of equipment was \$ 5,875 (details in b ). b. Sold equipment costing \$ 46,500 , for a loss of \$ 5,875 . c. Purchased equipment costing \$ 99,000 by paying \$ 35,000 cash and signing a long-term note payable for the balance. d. Borrowed \$ 2,000 cash by signing a short-term note payable. e. Paid \$ 47,500 cash to reduce the long-term notes payable. f. Issued 2,400 shares of common stock for \$ 20 cash per share. g. Net income and dividends were the only items that affected retained earnings. What is the amount of dividends declared and distributed in 2010?$ $Spirit Company,a merchandiser,recently completed its 2010 calendar year .For the year, (1)all sales are credit sales, (2)all credits to Accounts Receivable reflect cash receipts from customers, (3)all purchases of inventory are on credit, (4)all debits to Accounts Payable reflect cash payments for inventory,and (5)Other Expenses are paid in advance and are initially debited to Prepaid Expenses.The company's balance sheet and income statement follow: Additional Information on Year 2010 Transactions a. The loss on the cash sale of equipment was \$ 5,875 (details in b ). b. Sold equipment costing \$ 46,500 , for a loss of \$ 5,875 . c. Purchased equipment costing \$ 99,000 by paying \$ 35,000 cash and signing a long-term note payable for the balance. d. Borrowed \$ 2,000 cash by signing a short-term note payable. e. Paid \$ 47,500 cash to reduce the long-term notes payable. f. Issued 2,400 shares of common stock for \$ 20 cash per share. g. Net income and dividends were the only items that affected retained earnings. What is the amount of dividends declared and distributed in 2010?$ Additional Information on Year 2010 Transactions a. The loss on the cash sale of equipment was $\$ 5,875$ (details in $b$ ). b. Sold equipment costing $\$ 46,500$ , for a loss of $\$ 5,875$ . c. Purchased equipment costing $\$ 99,000$ by paying $\$ 35,000$ cash and signing a long-term note payable for the balance. d. Borrowed $\$ 2,000$ cash by signing a short-term note payable. e. Paid $\$ 47,500$ cash to reduce the long-term notes payable. f. Issued 2,400 shares of common stock for $\$ 20$ cash per share. g. Net income and dividends were the only items that affected retained earnings. What is the amount of dividends declared and distributed in 2010?

(Multiple Choice)

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Question 16

The first line item in the operating activities section of a spreadsheet for a statement of cash flows prepared using the indirect method is:

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Question 17

The FASB requires the reporting of cash flows per share as a measure of earnings performance.

(True/False)

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Question 18

Financing activities include (a)the purchase and sale of long-term assets, (b)the purchase and sale of short-term investments and (c)lending and collecting on loans.

(True/False)

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Question 19

The direct method for preparing and reporting the statement of cash flows reports net income and then adjusts the necessary items to calculate net cash provided or used by operating activities.

(True/False)

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Question 20

Showing 1 - 20 of 183

Information to prepare the statement of cash flows usually comes from three sources: (1)______________, (2)_ and (3)__________.

Depreciation expense is not reported on the statement of cash flows when the direct method is used.

Selected information from Doodle Company's for 2010 is below (in millions):

Use the following information to calculate the net cash provided or used by financing activities for the Brooks Corporation: (a)Net income,$10,000. (b)Sold common stock for $4,000 cash. (c)Paid cash dividend of $3,000. (d)Paid bond payable,$8,000. (e)Purchased equipment for $12,000 cash.

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the ______________ method is used.

The statement of cash flows is:

Financing activities include receiving cash from issuing debt and receiving cash dividends from investments in other companies' stocks.

A company had total assets of $745,000,total cash flows of $230,000 and cash flows from operations of $50,000.The cash flow on total assets ratio is equal to:

Managers only use the cash flow statement to evaluate the net cash increase or decrease and do not pay much attention to the details of cash flows from operating activities,cash flows from investing activities and cash flows from financing activities.

Describe the format of the statement of cash flows,including the reporting of significant noncash investing and financing activities.

Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities.

Cash flow amounts and their timing should be examined when planning and analyzing operating activities.

The cash flow on total assets ratio is computed by dividing _ by .

The first line item in the operating activities section of a spreadsheet for a statement of cash flows prepared using the indirect method is:

The FASB requires the reporting of cash flows per share as a measure of earnings performance.

Financing activities include (a)the purchase and sale of long-term assets, (b)the purchase and sale of short-term investments and (c)lending and collecting on loans.

The direct method for preparing and reporting the statement of cash flows reports net income and then adjusts the necessary items to calculate net cash provided or used by operating activities.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Analyzing and Interpreting Financial Statements

Investments and International Operations

Reporting and Analyzing Partnerships

Reporting and Preparing Special Journals

Filters

Exam 12: Reporting and Analyzing Cash Flows

Information to prepare the statement of cash flows usually comes from three sources: (1)__________________________, (2)_______________________ and (3)____________________.

Depreciation expense is not reported on the statement of cash flows when the direct method is used.

Selected information from Doodle Company's for 2010 is below (in millions):

Use the following information to calculate the net cash provided or used by financing activities for the Brooks Corporation: (a)Net income,$10,000. (b)Sold common stock for $4,000 cash. (c)Paid cash dividend of $3,000. (d)Paid bond payable,$8,000. (e)Purchased equipment for $12,000 cash.

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the ______________ method is used.

The statement of cash flows is:

Financing activities include receiving cash from issuing debt and receiving cash dividends from investments in other companies' stocks.

A company had total assets of $745,000,total cash flows of $230,000 and cash flows from operations of $50,000.The cash flow on total assets ratio is equal to:

Managers only use the cash flow statement to evaluate the net cash increase or decrease and do not pay much attention to the details of cash flows from operating activities,cash flows from investing activities and cash flows from financing activities.

Describe the format of the statement of cash flows,including the reporting of significant noncash investing and financing activities.

Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities.

Cash flow amounts and their timing should be examined when planning and analyzing operating activities.

The cash flow on total assets ratio is computed by dividing _____________ by ____________.

The first line item in the operating activities section of a spreadsheet for a statement of cash flows prepared using the indirect method is:

The FASB requires the reporting of cash flows per share as a measure of earnings performance.

Financing activities include (a)the purchase and sale of long-term assets, (b)the purchase and sale of short-term investments and (c)lending and collecting on loans.

The direct method for preparing and reporting the statement of cash flows reports net income and then adjusts the necessary items to calculate net cash provided or used by operating activities.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Analyzing and Interpreting Financial Statements

Investments and International Operations

Reporting and Analyzing Partnerships

Reporting and Preparing Special Journals

Filters

Information to prepare the statement of cash flows usually comes from three sources: (1)______________, (2)_ and (3)__________.

The cash flow on total assets ratio is computed by dividing _ by .