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Exam 12: Reporting and Interpreting the Statement of Cash Flows

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Question 41

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If a company's Cost of Goods Sold is $158,000 for the period,beginning and ending Inventory balances are $18,000 and $13,000,respectively,and the beginning and ending Accounts Payable balances are $19,000 and $7,500,respectively,what is the amount of the cash paid to suppliers?

A) $157,000
B) $163,500
C) $164,500
D) $151,500

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

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Question 42

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Cash flows from investing activities include cash:

A) inflows and outflows reflecting revenues and expenses reported on the income statement.
B) inflows from the issuance of bonds.
C) inflows from the sale of long-term investments.
D) inflows from the sale of a company's own stock to its stockholders.

E) A) and D)
F) B) and D)

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Question 43

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When the indirect method is used to determine net cash provided by (used in) operating activities,adding an increase in Interest Payable to net income eliminates the effect of recording expenses that:

Maya Company's purchase of 100 shares of Labrador Inc.common stock would be reported as a financing activity on its statement of cash flows.

If operating cash flows are calculated using the indirect method,which of the choices below correctly states the direction of adjustments to convert net income into net cash provided by or used in operations?

Which of the following statements about the statement of cash flows is not correct?

If Sales are $850,000 and the beginning and ending balances of Accounts Receivable are $43,000 and $48,000,respectively,the cash collected from customers is:

Under the indirect method,changes in current assets are used in determining cash flows from operating activities and changes in current liabilities are used in determining cash flows from financing activities.

St.Pierre Enterprises reported the following information in its financial statements: -Use the information above to answer the following question.What is the amount of cash collected from customers during the current year?

Which of the following classifications is not used on the statement of cash flows?

Which of the following would be classified as an investing activity on the statement of cash flows?

-Use the information above to answer the following question.The company would report net cash provided by (used in) financing activities of:

A healthy company typically shows positive cash flows in the financing activities section of the statement of cash flows.

How is the change in cash classified on the statement of cash flows?

Equipment with a cost of $80,000 and accumulated depreciation of $75,000 is sold for $12,000 cash. Required: Part a.Prepare the journal entry to record this transaction. Part b.Explain how this transaction would be reported on the statement of cash flows prepared using the indirect method.

Assume that a company chooses the indirect method to determine net cash flows from operating activities. Required: Part a.Explain why net income is the starting point when the indirect method is used to determine cash flows from operating activities. Part b.Briefly explain why a company's net income is most likely different in amount than its cash flows from operating activities.

If interest revenue for the period is $14,000 and the beginning and ending interest receivable balances are $1,320 and $5,900,respectively,cash received for interest is:

Braden and Sons,Inc.paid cash to purchase equipment costing $342,000 this year.Also this year,the company sold for $70,000 cash,equipment that originally cost $230,000 five years ago.How should these transactions be listed in the statement of cash flows?

Dover Co.'s comparative balance sheet indicated that the Equipment account increased by $40,000.Upon further investigation of the account changes,it is determined that Dover purchased equipment totaling $70,000 for the year.It also sold equipment with an original cost of $30,000 for $8,000 cash.Assuming these are the only transactions affecting the investing activities,Dover will report net cash flows provided by (used in) investing activities of:

Braden and Sons,Inc.borrowed $700,000 cash from Trenton Savings and Loan last year.In addition,the company repaid a $450,000 note payable to First National Bank.How should these transactions be listed in the Statement of Cash Flows?