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Exam 16: Reporting the Statement of Cash Flows

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Question 31

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The accountant for Mandarin Company is preparing the company's statement of cash flows for the fiscal year just ended.The following information is available: What is the amount of cash dividends paid that should be reported in the financing section of the statement of cash flows?

A) $42,000.
B) $43,000.
C) $63,000.
D) $1,000.
E) $41,000.

F) B) and E)
G) B) and D)

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Question 32

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Which of the following transactions or events should be reported as a source of cash from operating activities when using the direct method?

A) Credit sales.
B) Cash collections from customers.
C) Depreciation expense.
D) Cash received from the sale of a building.
E) Cash received from the sale of treasury stock.

F) B) and E)
G) A) and E)

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Question 33

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For each of the following separate cases,use the information provided to calculate the missing cash inflow or cash outflow using the direct method.

When preparing the operating activities section of the statement of cash flows using the indirect method,a decrease in accounts receivable is subtracted from net income.

Northington,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 operating activities using the indirect method:

A cash-based measure to help business decision makers estimate the amount and timing of cash flows is the cash flow on total assets ratio.

The statement of cash flows explains how transactions and events impact the end-of-period cash balance to produce the end-of-period net income.

Financing activities include receiving cash from issuing debt and receiving cash dividends from investments in other companies' stocks.

When preparing the operating activities section of the statement of cash flows using the indirect method,depreciation is subtracted from net income.

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

Use the following company information to prepare a schedule of significant noncash investing and financing activities: (a)Sold a building with a book value of $300,000 for $225,000 cash and sold land with a book value of $40,000 for $65,000 cash. (b)Issued 15,000 shares of $10 par value common stock in exchange for equipment with a market value of $175,000. (c)Retired a $100,000,8% bond by issuing another $100,000,7% bond issue. (d)Acquired land by issuing a twenty-year,5%,$73,000 note payable.

A company's Inventory balance at 12/31/16 was $188,000 and $200,000 at 12/31/15.Its Accounts Payable balance at 12/31/16 was $84,000 and $80,000 at 12/31/15,and its cost of goods sold for 2016 was $720,000.The company's total amount of cash payments for merchandise in 2016 equals:

Use the following information about the current year's operations of a company to calculate the cash paid for merchandise.

When using the indirect method to calculate and report net cash provided or used by operating activities,which of the following is subtracted from net income?

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

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:

A purchase of land in exchange for shares of stock is disclosed at the bottom of the statement of cash flows or in a note to the statement.

A company's income statement showed the following: net income,$134,000;depreciation expense,$30,000;and gain on sale of plant assets,$4,000.An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400;merchandise inventory increased $18,000;prepaid expenses increased $6,200;accounts payable increased $3,400.Calculate the net cash provided or used by operating activities.

Since it is recommended by the FASB,the direct method of preparing the statement of cash flows is most frequently used.

When preparing a statement of cash flows using the indirect method,which of the following is correct?