Exam 12: Reporting and Analyzing Cash Flows

Fernwood Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: The amount of cash paid for dividends was:

Tate Company's 2017 income statement and changes in selected balance sheet accounts are given below. Calculate the company's net cash provided or used by operating activities using the indirect method. The company also experienced the following during 2017:

For each of the following items, indicate whether it would be classified as an (O) operating activity, an (I) investing activity, a (F) financing activity, or a significant (N) noncash financing and investing activity. __________ (1) Received cash dividends from investments in trading securities. __________ (2) Collected accounts receivable from customers. __________ (3) Issued bonds payable for cash. __________ (4) Paid wages to employees. __________ (5) Issued stock for cash. __________ (6) Sold equipment for cash. __________ (7) Purchased land in exchange for a note payable. __________ (8) Paid cash dividends. __________ (9) Received interest from investments in trading securities. _________ (10) Purchases of land for cash.

Marshland Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: The amount of cash paid for dividends was:

The indirect method for the preparation of the operating activities section of the statement of cash flows:

Jeffreys Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $240,000 was sold for a $10,000 loss in Year 2. The following selected information is available for Jeffreys Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.

Companies have the option of using either the direct or indirect method to prepare the operating section of the statement of cash flows.

Preparation of the statement of cash flows does not involve:

A company had average total assets of $1,660,000, total cash flows of $1,320,000, cash flows from operations of $205,000, and cash flows from financing of $750,000. The cash flow on total assets ratio equals:

To be classified as a cash equivalent, the only criterion an item must meet is that it must be readily convertible to a known amount of cash.

A decrease in the inventory account during the year should be reported on the statement of cash flows as:

The cash flow on total assets ratio is computed by dividing average total assets by operating income.

The cash flow on total assets ratio compared to the total assets ratio can be used as an indicator of earnings quality.

Holly Oaks, Inc. is preparing the company's statement of cash flows for the fiscal year just ended. Using the following information, determine the amount of cash flows from financing activities:

Bagwell's net income for the year ended December 31, Year 2 was $185,000. Information from Bagwell's comparative balance sheets is given below. Compute the cash received from the sale of its common stock during Year 2.

A purchase of land in exchange for a long-term note payable is reported in the investing section of the statement of cash flows.

The statement of cash flows is:

Cash paid for merchandise is an operating activity.

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 payment of cash dividends to shareholders is classified as a financing activity.