Exam 12: Reporting and Analyzing Cash Flows

The indirect method reports individual operating cash outflows and cash inflows by activity.

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.

Use the following income statement and information about selected current assets and current liabilities to calculate the net cash provided or used by operating activities using the direct method. Selected beginning and ending balances of current asset and current liability accounts, all of which relate to operating activities, are as follows:

A main purpose of the statement of cash flows is to report all the major cash ________ and cash _______________.

When preparing the operating section of the statement of cash flows using the indirect method, noncash expenses are _____________ net income.

Terri's accounts receivable increased during the year by $5.9 million. It had a bad debt expense of $1.4 million, and its allowance for uncollectible accounts increased by $2.4 million. What is the amount of cash Terri received from customers during the reporting period if its sales were $45.0 million?

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

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 purchase of long-term assets by issuing a note payable for the entire amount is reported on the statement of cash flows in the:

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

The cash flow on total assets ratio is defined as the total cash flows from operations divided by the average total assets.

The following selected account balances are taken from a merchandising company's records: (a) Calculate the cash payments made during 2010 for merchandise. Assume all of the company's accounts payable balances are a result from merchandise purchases. (b) Calculate the cash receipts from customer sales during 2010. (c) Calculate the cash payments for salaries during 2010.