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Exam 14: Statement of Cash Flows

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Question 1

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If $475,000 of bonds payable are sold at 101, $475,000 would be reported in the cash flows from financing activities section of the statement of cash flows.

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Question 2

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Which of the following would not be found in a schedule of noncash investing and financing activities, reported at the end of a statement of cash flows?

A) equipment acquired in exchange for a note payable
B) bonds payable exchanged for capital stock
C) purchase of treasury stock
D) capital stock issued to acquire fixed assets

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Question 3

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If 800 shares of $40 par common stock are sold for $43,000, the $43,000 would be reported in the cash flows from financing activities section of the statement of cash flows.

The statement of cash flows is not one of the basic financial statements.

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

Free cash flow is

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.

Cash flows from investing activities, as part of the statement of cash flows, would include any receipts from the sale of land.

Lamar Corporation purchased land for $150,000. Later in the year, the company sold land with a book value of $190,000 for $200,000. Show how the effects of these transactions are reported on the statement of cash flows using the indirect method.

Purchasing equipment by issuing a six-month note should be shown on the statement of cash flows under the investing activities section.

Identify the section of the statement of cash flows a-d) where each of the following items would be reported. -Increase in accounts receivable

For each of the following activities that may take place during the accounting period, indicate the effect a-g) on the statement of cash flows prepared using the indirect method. Choices may be selected as the answer for more than one question. -payment of dividends

A company had net income of $252,000. Depreciation expense is $26,000. During the year, accounts receivable and inventory increased by $15,000 and $40,000, respectively. Prepaid expenses and accounts payable decreased by $2,000 and $4,000, respectively. There was also a loss on the sale of equipment of $3,000. How much was the net cash flow from operating activities on the statement of cash flows using the indirect method?

Cash paid to acquire treasury stock should be shown on the statement of cash flows under investing activities.

Free cash flow is cash flow from operations less cash used to purchase fixed assets to maintain productive capacity.

Dorman Company reported the following data: Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.

For each of the following activities that may take place during the accounting period, indicate the effect a-g) on the statement of cash flows prepared using the indirect method. Choices may be selected as the answer for more than one question. -purchase of equipment

Identify which section the statement of cash flows using the indirect method) would present information regarding the following activities. Use O for operating, I for investing, or F for financing). a. Issued common stock b. Redeemed bonds c. Issued preferred stock d. Purchased patents e. Net income f. Paid cash dividends g. Purchased treasury stock h. Sold long-term investment i. Sold equipment j. Purchased buildings k. Issued bonds

The main disadvantage of the direct method of reporting cash flows from operating activities is that the necessary data are often costly to accumulate.

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