Exam 16: The Statement of Cash Flows

Free cash flow is the amount of cash available from operating activities before paying for planned investments in long-term assets.

A debtor of Adams Company owes $500,000 but does not have enough cash to repay the debt.Following lengthy negotiations,the parties agreed that the debtor will issue 200,000 shares of common stock to settle the debt.This transaction will be reported in the investing activities section of the statement of cash flows for Adams Company.

The issuance of common stock for cash is shown as a ________.

The direct method starts with net income and adjusts it to net cash provided by operating activities.

Many companies use free cash flow to estimate the amount of cash that would be available for unexpected opportunities.

Which of the following is a cash outflow for a financing activity on the statement of cash flows?

On a statement of cash flows prepared using the direct method,cash received from selling merchandise is considered a ________.

For each of the following items,relating to the adjustments made to reconcile net income to net cash provided by operating activities section,state whether the adjustment is an increase or decrease to net income.

The spreadsheet starts with the beginning statement of cash flows and concludes with the ending statement of cash flows.

Nashville Records Company uses the indirect method to prepare its statement of cash flows.Refer to the following sections of the comparative balance sheet: Additional information for 2018: • No stock was retired. • No treasury stock was sold. • The company repaid $60,000 of long-term notes payable. • The company borrowed $51,000 on a new long-term note payable. • Net income for the year was $68,000. Prepare the financing section of the statement of cash flows for the year ended December 31,2018.

Kentucky Company uses the indirect method to prepare the statement of cash flows.Refer to the following income statement: Additional information provided by the company includes the following: 1)Current assets,other than cash,increased by $20,000. 2)Current liabilities decreased by $1500. Compute the net cash provided by (used for)operating activities.

Nebraska Auto Parts Company uses the indirect method to prepare the statement of cash flows.Refer to the following income statement: Additional information provided by the company includes the following: Current assets other than cash increase by $36,000. Current liabilities decrease by $1,500. Prepare the operating activities section of the statement of cash flows.

Mid-Town Auto Parts Company uses the direct method to prepare its statement of cash flows.Refer to the following information reported for 2019: 1.Sales Revenue,$520,000 2)Accounts Receivable,beginning balance,$99,000 3)Accounts Receivable,ending balance,$62,000 Compute the collections from customers.

Kansas Company uses the indirect method to prepare its statement of cash flows.Refer to the following portion of the comparative balance sheet: Additional information provided by the company includes the following: During 2019,the company repaid $60,000 of long-term notes payable. During 2019,the company borrowed $51,000 on a new long-term note payable. Use the T-account format to evaluate the transactions affecting the long-term notes payable account.

Which of the following is TRUE of the statement of cash flows?

Trinity Coatings Company uses the indirect method to prepare its statement of cash flows.Refer to the following information for 2018: The beginning balance in the Cash account was $2900. Net cash provided by operating activities: $40,000 Net cash used for investing activities: $(25,500) Net cash provided by financing activities: $1700 The statement of cash flows will show ________.

The total change in cash should equal the net income for the period.

The statement of cash flows is the link between the accrual-based income statement and the cash reported on the balance sheet.

Which of the following statements accurately describes the statement of cash flows?

Regarding the use of a spreadsheet for the preparation of the statement of cash flows,which of the following statements is incorrect?