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Exam 24: The Statement of Cash Flows

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Question 1

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Information from Zwatsch Company's income statement is as follows: net income $55,000,depreciation expense $12,000;loss on sale of plant assets $4,000;gain on retirement of bonds $10,000;an increase in accounts receivable of $6,000 and dividend payments of $5,000.The net cash provided by operating activities is:

A) $73,000.
B) $67,000.
C) $55,000.
D) $50,000.

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Question 2

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The retirement of bonds with cash by a company is reported under which of the following?

A) Operating Activities
B) Investing Activities
C) Financing Activities
D) Disclosures

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Question 3

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

The cash received from issuing common stock would not be reported on the statement of cash flows.

A sale of used equipment for cash produces a cash inflow from investing activities.

The Natural Company's cash balance at December 31,2016,was $150,000.The following information was reported on the company statement of cash flows for 2017: The Natural Company's Statement of Cash Flows would report Cash Flows from Operating Activities totaling:

FASB requires companies to report the Statement of Cash Flows using the direct method.

Polyglot Services,Inc.sold equipment that cost $45,600 for $12,450.Depreciation on the equipment from purchase to date of sale amounted to $35,000.What amount is reported in the Cash Flows from Investing Activities section of the Statement of Cash Flows?

The purchase or resale of treasury stock is reported in which of the following categories?

A gain on the sale of equipment is reported in the ____________________ activities section of the statement of cash flows.

The Natural Company's cash balance at December 31,2016,was $150,000.The following information was reported on the company statement of cash flows for 2017: The Natural Company's Statement of Cash Flows would report Cash Flows from Financing Activities totaling:

The statement of cash flows is often said to complement the income statement and the balance sheet.Explain the significance of this comparison.

____________________ activities are transactions that involve the acquisition or disposal of assets that will not be used up or consumed in routine operations.

When the ____________________ method of preparing the statement of cash flows is used,the interest and income taxes paid during the period are disclosed in notes accompanying the statement.

The purpose of the statement of ____________________ is to report the cash balance at the beginning and end of the fiscal period and to show the sources and uses of cash during the period.

The schedule of ____________________ supplements the income statement,showing selling and administrative expenses in greater detail.

Eleemosynary Organization acquired land valued at $56,000 for 4,200 shares of its stock.Where on the Statement of Cash flows does this transaction activity appear?

Net income must be adjusted for changes in ____________________ assets and liabilities,such as accounts receivable and accounts payable,when determining the net cash provided by operating activities.

Interest expense is treated as an outflow of cash that results from a(n)____________________ activity.

Explain the differences between the direct and the indirect methods of preparing the operating activities section of the statement of cash flows.