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Exam 12: Reporting Cash Flows

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Question 31

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When analyzing the changes on a spreadsheet used to prepare a statement of cash flows,the cash flows from investing activities generally are affected by:

A) Net income,current assets,and current liabilities.
B) Noncurrent assets.
C) Noncurrent liability and equity accounts.
D) Both noncurrent assets and noncurrent liabilities.
E) Equity accounts only.

F) C) and E)
G) None of the above

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Question 32

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The gain or loss from retirement of notes payable is reported under cash flows from operating activities on the statement of cash flows using the indirect method.

A) True
B) False

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Question 33

Multiple Choice

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The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:

Atom Corporation paid cash dividends totaling $75,000 during its most recent fiscal year.How should this information be reported on Atom's statement of cash flows?

Financing activities include receiving cash from issuing debt and receiving cash dividends from investments in other companies' stocks.

Equipment costing $200,000 with accumulated depreciation of $160,000 is sold at a loss of $10,000.This implies that $30,000 cash was received from the sale.

Cash paid for merchandise is an operating activity.

The cash flow on total assets ratio is calculated by:

Transactions that include purchasing and selling plant assets and investments in debt and equity securities.

Use the following calendar-year information to prepare Adam Company's statement of cash flows using the direct method.

________ activities include the cash effects of transactions and events that determine net income.

Use the information provided below to calculate the cash paid for interest for the period.

Equipment costing $100,000 with accumulated depreciation of $40,000 is sold at a loss of $10,000.This implies that $40,000 cash was received from the sale.

When using a spreadsheet to prepare the statement of cash flows,a decrease in accounts payable is entered in the Analysis of Changes columns with a debit in the statement of cash flows section and a credit in the balance sheet section.

Financing activities include (a)the purchase and sale of long-term assets,(b)the purchase and sale of short-term investments,and (c)lending and collecting on loans.

A company reported that its bonds with a par value of $50,000 and a carrying value of $57,000 are retired for $60,000 cash,resulting in a loss of $3,000.The amount to be reported under cash flows from financing activities is:

To effectively evaluate cash flows,we separately analyze investing,financing,and operating activities.

When preparing the operating activities section of the statement of cash flows using the indirect method,a decrease in accounts receivable is subtracted from net income.

Mayweather reports net income of $305,000 for the year ended December 31.It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment.Its comparative balance sheet reveals a $40,200 increase in accounts receivable,a $10,200 decrease in prepaid expenses,a $15,200 increase in accounts payable,a $12,500 decrease in wages payable,a $75,000 increase in equipment,and a $100,000 decrease in notes payable.Calculate the net increase in cash for the year.

A company's transactions with its creditors to borrow money and/or to repay the principal amounts of both short- and long-term debt are reported as cash flows from: