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Exam 21: Statement of Cash Flows Revisited

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Question 1

Multiple Choice

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A loss on the sale of machinery in the ordinary course of business should be presented in a statement of cash flows prepared under the indirect method as a(n)

A) inflow from operating activities.
B) inflow from investing activities.
C) adjustment to reconcile net income to cash from operating activities.
D) outflow from investing activities.

E) A) and C)
F) All of the above

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C

Question 2

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What is the effect of the sale of $5,000 worth of cash equivalents at cost in the statement of cash flows prepared under the direct method?

A) Add $5,000 in the reconciliation
B) $5,000 investing cash inflow
C) $5,000 operating cash inflow
D) No disclosure

E) A) and B)
F) A) and C)

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Question 3

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The amortization of bond discount related to long-term debt should be presented in a statement of cash flows prepared using the indirect method as a(n)

Cash outflows from investing activities would include payments for all of the following except

On a statement of cash flows prepared using the direct method,cash from customers would be sales plus a(n)

Assume Bellini Company holds the following assets at year-end and classifies as cash equivalents everything allowed by professional standards. What would be the total cash equivalents at year-end for Bellini Company?

Which of the following causes a change in the amount of cash held by a company?

Which of the following would NOT be a cash flow from financing activities for Carlton Company?

Choose the combination that best reflects the appropriate classification of cash paid for investing and financing activities.

Which of the following items involving current trade accounts receivable is most likely to appear in a statement of cash flows?

Under the direct method,cash paid to suppliers can be computed as cost of goods sold for the period

The following information for Amphora Company is available at December 31,2014,and for the year then ending: The following information is available for specific accounts and transactions: 1.On February 2,2014,Amphora issued a 10 percent stock dividend to shareholders of record on January 15,2014.Market price per share of the common stock on February 2,2014,was $15. 2.On March 1,2014,Amphora issued 3,800 shares of common stock for land.The common stock had a current market value of approximately $40,000 on March 1,2014. 3.On April 15,2014,Amphora repurchased its long-term bonds payable with a face value of $50,000 for cash. 4.On June 30,2014,Amphora sold for $19,000 cash equipment having a book value of $23,000 and an original cost of $53,000. 5.On September 30,2014,Amphora declared and paid a 4 cent per share cash dividend to shareholders of record on August 1,2014. 6.On October 1,2014,Amphora purchased land for $85,000 cash. Required: Prepare a statement of cash flows for Amphora Company for the year ending December 31,2014,using the indirect method.

Cash inflows from investing activities would include all of the following except

A firm's accumulated depreciation account increased $30,000 for the year and total plant assets at cost increased $200,000.During the year,the firm purchased $350,000 of new equipment for cash,and sold equipment for $50,000 cash.This equipment had been depreciated $30,000 at the time of the sale.What is the complete disclosure of these events in the statement of cash flows prepared under the direct method?

Which of the following is NOT added to net income as an adjustment to reconcile net income to cash from operating activities on the statement of cash flows?

Which of the following is NOT an adjustment to reconcile net income to cash from operating activities?

Which of the following is a non-cash transaction that should be disclosed in a schedule accompanying the statement of cash flows?

A company sold an investment in trading securities originally costing $30,000,for $28,000.At the beginning of the year,the investment had a valuation allowance of $3,000,debit.What is the correct disclosure for these events on the statement of cash flows prepared under the direct method,assuming that this is the only investment in trading securities?

Which of the following need not be disclosed in a statement of cash flows as a noncash exchange?

At the beginning of the year,a firm leased equipment on a capital lease,capitalizing $60,000 in both its lease liability and leased assets accounts.The contract calls for December 31 payments of $15,000.The lessee's annual reporting period ends December 31 and the contract reflects 10% interest.The lessee made the first payment as required.The direct method statement of cash flows for the lessee should reflect which of the following in the first year of the lease contract (ignore noncash disclosures) ?