FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 21: The Statement of Cash Flows Revisited

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Multiple Choice

Review LaterAdd Note

Review Later

Moon Company owns 56 million shares of stock as a long-term investment in Center Company and Moon does not have significant influence over Center. During 2018, the fair value of those shares increased by $34 million. What effect does this increase have on Moon's 2018 adjustments in the statement of cash flows?

A) Cash flow from operating activities will be decreased.
B) Cash flow from investing activities will be increased.
C) Cash flow from financing activities will be increased.
D) No effect.

E) C) and D)
F) A) and C)

Correct Answer

verified

Show Answer

Question 52

Multiple Choice

Review LaterAdd Note

Review Later

Cash flows from financing activities do not include:

A) cash received from issuing preferred stock.
B) cash paid for treasury stock.
C) declaration of a cash dividend.
D) repayment of a bank loan.

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

Correct Answer

verified

Show Answer

Question 53

Multiple Choice

Review LaterAdd Note

If bond interest expense is $800,000, bond interest payable increased by $8,000 and bond discount decreased by $2,000, cash paid for bond interest is:

Following are the income statement and some additional information for Parson Corporation for 2018. All sales were on credit and accounts receivable increased by $600 in 2018 compared to 2017. Merchandise purchases were on credit with an increase in accounts payable of $400 during the year. Ending inventory was $500 larger than beginning inventory. Income taxes payable increased $300 during the year. All operating expenses were paid for in cash. Required: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.

The accounting records of Westlake Industries provided the data below. $\begin{array} { | l | l | } \hline \text { Net income } & \$ 200,000 \\\hline \text { Depreciation expense } & 15,000 \\\hline \text { Decrease in inventory } & 12,000 \\\hline \text { Increase in accounts receivable } & 1,400 \\\hline \text { Increase in interest payable } & 1,600 \\\hline \text { Amortization of bond discount } & 3,000 \\\hline \text { Increase in accounts payable } & 7,000 \\\hline \text { Cash dividends paid } & 20,000 \\\hline\end{array}$ Required: Prepare a reconciliation of net income to net cash flows from operating activities.

Each year, White Mountain Enterprises (WME) prepares a reconciliation schedule that compares its income statement with its statement of cash flows on both the direct and indirect method bases. In its 2018 income statement, WME reported $58,000 for insurance expense. WME paid $72,000 in insurance premiums during 2018. In its reconciliation schedule, WME should:

Generally speaking, cash flows from operating activities include the elements of net income reported on a cash basis.

A loss on the sale of machinery should be reported in the statement of cash flows as:

Which of the following is reported as an operating activity in the statement of cash flows?

Creble Company reported net income for 2018 in the amount of $40,000. The company's financial statements also included the following: $\begin{array}{lll}\text {Increase in accounts receivable }&\$4,000\\\text {Decrease in inventory }&2,000\\\text {Depreciation expense }&3,000\\\text {Gain on sale of equipment }&5,000\\\end{array}$ In the statement of cash flows what is net cash provided by operating activities under the indirect method?

Charlene Company sold a printer with a cost of $68,000 and accumulated depreciation of $23,000 for $20,000 cash. This transaction would be reported as:

What activities are included in the statement of cash flows under the section titled "Cash flows from investing activities"?

On December 31, 2018, Wellstone Company reported net income of $70,000 and sales of $210,000. The company also reported beginning and ending accounts receivable at $20,000 and $25,000, respectively. Wellstone will report cash collected from customers in its 2018 statement of cash flows (direct method) in the amount of:

Each year, White Mountain Enterprises (WME) prepares a reconciliation schedule that compares its income statement with its statement of cash flows on both the direct and indirect method bases. In its 2018 income statement, WME reported a $40,000 loss on the sale of equipment. In its reconciliation schedule, WME should:

Partial balance sheets and additional information are listed below for Sowell Company. Sowell Company Partial Balance Sheets as of December 31 $\begin{array}{|l|l|l|}\hline \text { Assets } & 2018 & 2017 \\\hline \text { Cash } & \$ 40,000 & \$ 20,000 \\\hline \text { Accounts receivable } & 70,000 & 85,000 \\\hline \text { Inventory } & 40,000 & 35,000 \\\hline \text { Liabilities } & & \\\hline \text { Accounts payable } & \$ 54,000 & \$ 62,000 \\\hline\end{array}$ Additional information for 2018: Net income was $88,000. Depreciation expense was $19,000. Required: Prepare the operating activities section of the statement of cash flows for 2018 using the indirect method.

In a statement of cash flows in which operating activities are reported by the direct method, which of the following would increase reported cash flows from operating activities?

In preparing its cash flow statement for the year ended December 31, 2018, Red Co. gathered the following data: $\begin{array}{lll}\text {Gain on sale of land }&\$12,000\\\text {Proceeds from sale of land }&20,000\\\text {Purchase of Blue, Inc., bonds (facevalue \$ 200,000 ) }&360,000\\\text { Amortization of bond discount}&4,000\\\text {Cash dividends declared }&90,000\\\text { Cash dividends paid}&76,000\\\text { Proceeds from sales of Red Co. common stock}&150,000\\\end{array}$ In its December 31, 2018, statement of cash flows, what amount should Red report as net cash outflows from investing activities?

Which of the following is reported as a financing activity in the statement of cash flows?

Indicate the reporting classification that would apply to each of the following transactions

In a statement of cash flows using the indirect method, an increase in the available-for-sale debt securities account due to an increase in the debt's fair value should be reported as: