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Exam 12: Statement of Cash Flows

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Question 91

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Assume the indirect method is used to compute cash flows from operations. For each item listed below, indicate the effect on net income in arriving at cash flows from operations by choosing one of the following code letters.

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1. D 6. A
2. D 7. A
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Question 92

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The financial statements of Lowz Company appear below: The following additional data were provided: 1. Dividends declared and paid were $35,000. 2. During the year, equipment was sold for $17,000 cash. This equipment cost $28,000 originally and had a book value of $17,000 at the time of sale. 3. All depreciation expense is in the operating expenses. 4. All sales and purchases are on account. 5. Accounts payable pertain to merchandise suppliers. 6. All operating expenses except for depreciation were paid in cash. Instructions Prepare a statement of cash flows for Lowz Company using the direct method.

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*$24000 - $11000 = $13000 ba...

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Question 93

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The change in cash is equal to the change in liabilities less the change in equity plus the change in noncash assets.

Spa Company uses the direct method in determining net cash provided by operating activities. The income statement shows income tax expense $85,000. Income taxes payable were $35,000 at the beginning of the year and $20,000 at the end of the year. Cash payments for income taxes are

Which of the following transactions does not affect cash during a period?

Small Company reported cost of goods sold of $179,000 on its 2017 income statement. The company's beginning inventory was $35,000. The ending inventory was valued at $40,000. The Accounts Payable balance at January 1 was $25,000. The December 31 balance in Accounts Payable was $22,000. Instructions Compute cash payments to suppliers.

Which of the following would be subtracted from net income using the indirect method?

Each of the following are particularly interested in the statement of cash flows except

Cash flow from investing activities is considered the most important category on the statement of cash flows because it is considered the best measure of expected income.

Classify each of the following as a(n):

Analysis of the changes in all of the noncash balance sheet accounts will explain the change in the cash account.

In the Papyrus Corporation, cash receipts from customers were $136,000, cash payments for operating expenses were $102,000, and one-third of the company's $9,300 income taxes were paid during the year. Net cash provided by operating activities is:

Assuming a statement of cash flows is prepared, indicate the reporting of the transactions and events listed below by major categories on the statement. Use the following code letters to indicate the appropriate category under which the item would appear on the statement of cash flows. , -A comparative balance sheet for Rocker Company appears below: Additional information: 1. Net income for the year ending December 31, 2017 was $35,000. 2. Cash dividends of $15,000 were declared and paid during the year. 3. Long-term investments that had a cost of $17,000 were sold for $14,000. 4. Sales for 2017 were $120,000. Instructions Prepare a statement of cash flows for the year ended December 31, 2017, using the indirect method.

Free cash flow equals cash provided by

Indicate where the event purchase of land and a building with a mortgage would appear, if at all, on the indirect statement of cash flows.

Accounts receivable arising from sales to customers amounted to $86,000 and $77,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $290,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is

The acquisition of a building by issuing bonds would be considered an investing and financing activity that did not affect cash.

In converting net income to net cash provided by operating activities, under the indirect method:

All of the following statements about free cash flow are false except:

Which one of the following items is not generally used in preparing a statement of cash flows?