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Exam 12: Reporting and Analyzing Cash Flows

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Question 41

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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.

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Question 42

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The statement of cash flows is:

A) Another name for the statement of financial position
B) A financial statement that presents information about changes in equity during a period
C) A financial statement that reports the cash inflows and outflows for an accounting period and that classifies those cash flows as operating activities, investing activities or financing activities
D) A financial statement that lists the types and amounts of assets, liabilities and equity of a business on a specific date
E) A financial statement that lists the types and amounts of the revenues and expenses of a business for an accounting period

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

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Question 43

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A company's inventory balance at 12/31/08 was $200,000 and was $188,000 at 12/31/09. Its accounts payable balance at 12/31/08 was $80,000 and was $84,000 at 12/31/09 and its cost of goods sold for 2009 was $720,000. The company's total amount of cash payments for merchandise in 2009 equals:

Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities.

___________________ activities generally include those transactions and events that affect long-term assets.

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

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

When the operating activities section of the statement of cash flows is reported using the direct method, the FASB requires:

Holly Company's accounts receivable increased during the year by $8.5 million. It had a bad debt expense of $3.0 million, and its allowance for uncollectible accounts increased by $1.5 million. What is the amount of cash received from customers if Holly's sales were $50.2 million?

Business activities that either generate or use cash are classified as operating, investing or financing activities on the statement of cash flows.

Use the following information to calculate cash received from dividends:

Both cash dividends received and interest received are considered to be investing inflows.

Spirit Company, a merchandiser, recently completed the 2010 calendar year. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company's balance sheet and income statement follow: Additional Information on Year 2010 Transactions Determine the cash received by Spirit for the equipment sold in item C above.

Which of the following items is reported on the statement of cash flows under financing activities?

A company had cost of goods sold of $150,000 during a given period. Compute cash paid for merchandise during this period given the following data.

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?

Water Girl Corp.'s 2010 income statement follows: The company also experienced the following during 2010: Required: Calculate the company's net cash provided or used by operating activities using the direct method.

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 the 2010 calendar year using the indirect method.

Non-cash financing activities are disclosed in a note in the financing section of the statement of cash flows.

Wilma Corporation prepares its statement of cash flows using the indirect method to report operating activities. Net income for the 2011 fiscal year was $634,000. Depreciation and amortization expense of $60,000 and 30,000 respectively were included with operating expenses in the income statement. The following information describes the changes in current assets and liabilities other than cash: Determine the net cash flow provided (used) by operating activities.