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Exam 13: Statement of Cash Flows

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Question 81

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To arrive at cash flows from operations, it is necessary to convert the income statement from an accrual basis to the cash basis of accounting.

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B) False

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Question 82

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The income statement disclosed the following items for the current year: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.

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Note: The change in dividend...

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Question 83

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Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

The net income reported on the income statement for the current year was $210,000.  Depreciation recorded on equipment and a building amount to $62,500 for the year.  Balances of the current asset and current liabilities accounts at the beginning and end of the year are as follows: (a) Prepare the cash flows from operating activities section of the statement of cash flows, using the indirect method. (b) If the direct method had been used, would the net cash flow from operating activities have been the same?  Explain.

The net income reported on the income statement for the current year was $58,000.  Depreciation recorded on fixed assets for the year was $24,000.  In addition, equipment with an original cost of $130,000 and accumulated depreciation of $115,000 on the date of the sale, was sold for $20,000.  Balances of the current asset and current liability accounts at the end and beginning of the year are listed below.  Prepare the cash flows from operating activities section of a statement of cash flows using the indirect method.

Fortune Corporation's comparative balance sheet for current assets and liabilities was as follows: Adjust Year 2 net income of $65,000 for changes in operating assets and liabilities to arrive at cash flows from operating activities using the indirect method.

The Dickinson Company reported net income of $155,000 for the current year. Depreciation recorded on buildings and equipment amounted to $65,000 for the year.  In addition, a building with an original cost of $250,000 and accumulated depreciation of $190,000 on the date of the sale, was sold for $75,000.  Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: Prepare the cash flows from the operating activities section of the statement of cash flows using the indirect method.

Connor Designs Company has cash flows for operating activities of $425,000.  Cash flows used for investments in property, plant, and equipment totaled $65,000, of which 70% of this investment was used to replace machinery to maintain existing capacity. What is the free cash flow for Connor Designs?

To determine cash payments for merchandise for the statement of cash flows using the direct method, a decrease in accounts payable is added to the cost of merchandise sold.

If a business issued bonds payable in exchange for land, the transaction would be reported in a separate schedule on the statement of cash flows.

The cost of merchandise sold during the year was $45,000.  Merchandise inventories were $13,500 and $10,500 at the beginning and end of the year, respectively.  Accounts payable were $7,000 and $5,000 at the beginning and end of the year, respectively.  Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total

Which of the following would not be classified as an operating activity?

On the basis of the following data for Breach Co. for the current and preceding years ended December 31, prepare a statement of cash flows using the indirect method.   Assume that equipment costing $25,000 was purchased for cash and no long term assets were sold during the period.   Stock was issued for cash-3,200 shares at par. Net income for the current year was $76,000. Cash dividends declared and paid were $13,000.

Kennedy, Inc. reported the following data: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.

If cash dividends of $135,000 were paid during the year and the company sold 1,000 shares of common stock at $30 per share, the statement of cash flows would report net cash flow from financing activities as $165,000.

Which of the following should be shown on a statement of cash flows under the financing activities section?

Cash dividends of $50,000 were declared during the year.  Cash dividends payable were $10,000 and $5,000 at the beginning and end of the year, respectively.  The amount of cash for the payment of dividends during the year is

The following information is available from the current period financial statements: The net cash flow from operating activities using the indirect method is

The net income reported on the income statement for the current year was $275,000.  Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively.  Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

Net income for the year was $29,500.  Accounts receivable increased $2,500, and accounts payable increased $5,400. There were no other changes in noncash current assets and liabilities. Under the indirect method, the cash flow from operations is $32,400.