FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 12: Reporting Cash Flows

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

True/False

Review LaterAdd Note

Review Later

When preparing the operating activities section of the statement of cash flows using the indirect method, decreases in current operating assets are added to net income.

A) True
B) False

Correct Answer

verified

Show Answer

Question 62

Essay

Review LaterAdd Note

Review Later

The following information is available for the Aarons Corporation: Aarons Corporation Balance Sheets At December 31 $\begin{array}{c}\text {Aarons Corporation}\\\text { Income Statement}\\\text {For Year Ended December 31,20X}\\\begin{array}{|l|}\hline \text {Sales}\\\hline \text {Cost of goods sold}\\\hline \text {Depreciation expense}\\\hline \text {Other operating expenses}\\\hline\\ \text {Interest expense}\\\hline \text {Other gains (losses):}\\\hline\\ \text {Loss on sale of equipment}\\\hline \text {Income before taxes}\\\hline \text {Income taxes expense}\\\hline\\ \text {Net incone}\\\hline \end{array}\begin{array}{l|}\hline\\\hline\$80,900\\\hline29,400\\\hline48,000\\\hline\\2,000\\\hline\\\hline\\\\\hline\\\hline\\\hline\\\\\hline\end{array}\begin{array}{l|}\hline\$240,000\\\hline\\\hline\\\hline\\\hline\\(160,300)\\\hline\\\hline\\(8,400)\\\hline71,300\\\hline27,650\\\hline\$\\43,650\\\hline\end{array}\end{array}$ 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 20X2 using the indirect method.

Correct Answer

verified

(a) Received from sales of lo...

View Answer

Show Answer

Question 63

Multiple Choice

Review LaterAdd Note

The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is:

Analysis reveals that a company had a net increase in cash of $20,000 for the current year. Net cash provided by operating activities was $18,000; net cash used in investing activities was $10,000 and net cash provided by financing activities was $12,000. If the year-end cash balance is $24,000, the beginning cash balance was:

If a company is using the indirect method to prepare the statement of cash flows, identify where an increase in the accounts receivable account should be reported:

Use the following income statement and information about selected current assets and current liabilities for Kimberline Industries to calculate the net cash provided or used by operating activities using the indirect method. $\begin{array}{c}\text {KMMBERLINE INDUSTRIES}\\\text {Income Statement}\\\text {For Year Ended December 31, 20X1}\\\begin{array}{|l|r|r|}\hline\text { Sales } & & \$ 280,000 \\\hline\text { Cost of goods sold } & & 124,000 \\\hline \text { Gross profit from sales } & & \$ 156,000 \\\hline \text { Operating expenses: } & & \\\hline \text { Salaries and wages expense } & \$ 35,000 & \\\hline \text { Depreciation expense } & 11,000 \\\hline \text { Rent expense } & 27,200 & \\\hline \text { Interest expense } & 3,900 & 77,100 \\\hline \text { Income from operations } & & \$ 78,900 \\\hline \text { Loss on sale of land } & & 4,700 \\\hline \text { Net income } & & \$ 74,200 \\\hline\end{array}\end{array}$ Increases and decreases of current asset and current liability accounts, all of which relate to operating activities, are as follows: $\begin{array} { | l | r | } \hline &{ \text { Change } } \\\hline \text { Accounts receivable increase } & \$ 3,600 \\\hline \text { Merchandise inventory decrease } & 1,700 \\\hline \text { Accounts payable increase } & 1,100 \\\hline \text { Salaries and wages payable decrease } & 2,600 \\\hline\end{array}$

A cash dividend payment to shareholders during the year should be reported on the statement of cash flows as:

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. $\begin{array} { | l | c | c | } \hline \text { At December 31 } & \text { Year } 2 & \text { Year } 1 \\\hline \text { Common Stock, } \$ 5 \text { par value } & \$ 500,000 & \$ 450,000 \\\hline \text { Paid-in capital in excess of par } & 948,000 & 853,000 \\\hline \text { Retained earnings } & 688,000 & 582,000 \\\hline\end{array}$

Use the following information and the indirect method to calculate the net cash provided or used by operating activities: $\begin{array} { | l | r | } \hline \text { Net income } & \$ 85,300 \\\hline \text { Depreciation expense } & 12,000 \\\hline\\\hline \text { Gain on sale of land } & 7,500 \\\hline \text { Increase in merchandise inventory } & 2,050 \\\hline \text { Increase in accounts payable } & 6,150 \\\hline\\\hline \end{array}$

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?

A noncash investing transaction should be disclosed in either a footnote or at the bottom of the statement of cash flows.

Bagrov Corporation had a net decrease in cash of $10,000 for the current year. Net cash used in investing activities was $52,000 and net cash used in financing activities was $38,000. What amount of cash was provided (used) in operating activities?

Use the following information to calculate the net cash provided or used by financing activities for the Streams Corporation: (a) Net income, $10,000 (b) Sold common stock for $40,000 cash (c) Paid cash dividend of $13,000 (d) Paid bond payable, $28,000 (e) Purchased equipment for $12,000 cash

________ activities include the cash effects of transactions and events that determine net income.

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:

Alvez Company reports net income of $305,000 for the year ended December 31. It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment. Its comparative balance sheet reveals a $40,200 increase in accounts receivable, a $10,200 decrease in prepaid expenses, a $15,200 increase in accounts payable, a $12,500 decrease in wages payable, and a $100,000 decrease in notes payable. Calculate the cash provided (used) in operating activities using the indirect method.

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

Babson reported assets of $13,362 million at January 1 and $13,369 million as of December 31 of the current year. Babson's net cash flows from operations were $2,204 million. Calculate the cash flow on total assets ratio for Babson.

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

Use the following information about the current year's operations of a company to calculate the cash paid for merchandise. $\begin{array}{c}\begin{array}{|l|}\hline \text {Cost of goods sold.}\\\hline \text {Merchandise inventory, January 1}\\\hline \text {Merchandise inventory, December 31}\\\hline \text {Accounts payable, January 1}\\\hline \text {Accounts payable, December 31}\\\hline\end{array}\begin{array}{r|}\hline\$ 226,000 \\\hline54,800 \\\hline57,400 \\\hline54,400\\\hline59,800\\\hline \end{array}\end{array}$