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Exam 16: Reporting the Statement of Cash Flows

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Question 51

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Most managers stress the importance of understanding and predicting cash flows for business decisions.

A) True
B) False

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Question 52

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What are the five usual steps involved in the preparation of the statement of cash flows?

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The preparation of the statement of cash...

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Question 53

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The reporting of financing activities in the statement of cash flows is identical under either the direct or indirect methods.

Weston 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 operating activities using the indirect method:

Cash flows from selling trading securities are usually reported in the statement of cash flows as part of:

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:

When using a spreadsheet to prepare the statement of cash flows,a decrease in accounts payable is entered in the Analysis of Changes columns with a debit in the statement of cash flows section and a credit in the balance sheet section.

Define the cash flow on total assets ratio and explain how it is used to evaluate cash flows and to assess company performance.

The cash flow on total assets ratio reflects actual cash flows and is therefore affected by the accounting constraints of recognition and measurement for net income.

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

The following information is available for the Ehrens 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 calendar-year 2013 using the indirect method.

A company had average total assets of $2,316,000,total cash flows of $1,320,000,cash flows from operations of $455,000,and cash flows for plant assets of $850,000.The cash flow on total assets ratio equals:

Use the following company information to calculate its net cash provided or used by investing activities: (a)Equipment with a book value of $125,000 and an original cost of $220,000 was sold at a gain of $22,000. (b)Paid $49,000 cash for a new truck. (c)Sold land costing $30,000 for $26,000 cash,realizing a $4,000 loss. (d)Purchased treasury stock for $53,000 cash. (e)Long-term investments in stock are sold for $41,000 cash,realizing a gain of $3,500.

For each of the following items,indicate whether it would be classified as either an (O)operating activity,an (I)investing activity,a (F)financial activity,or a significant (N)noncash financing and investing activity. __________ (1)Cash sales of merchandise. __________ (2)Sale of land for cash. __________ (3)Signed a note payable in exchange for cash. __________ (4)Purchased supplies for cash. __________ (5)Paid cash to settle an account payable. __________ (6)Purchased a warehouse in exchange for shares of its stock. __________ (7)Paid interest on a note payable. __________ (8)Reissued treasury stock. __________ (9)Purchased equipment for cash. _________ (10)Purchased equipment in exchange for a 6-month note payable.

The cash flow on total assets ratio is calculated by:

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of both short- and long-term debt are reported as cash flows from:

The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:

The statement of cash flows explains the difference between the beginning and ending balances of cash and cash equivalents.

The primary purpose of the statement of cash flows is to report all major cash receipts (inflows)and cash payments (outflows)during a period.

In preparing a company's statement of cash flows for the most recent year on the indirect method,the following information is available: Net cash provided by operating activities was: