Question 1

What are the five usual steps involved in the preparation of the statement of cash flows?

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Question 2

Explain the value of separating cash flows into operating activities,investing activities,and financing activities to financial statement users in analyzing cash flows and the company's financial performance and condition.

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Question 3

Use the following company information to prepare a schedule of significant noncash investing and financing activities:
(a)Sold a building with a book value of $125,000 for $195,000 cash and land with a book value of $32,000 for $65,000 cash.
(b)Issued 10,000 shares of $10 par value common stock in exchange for equipment with a market value of $135,000.
(c)Retired a $100,000,10% bond by issuing another $100,000,12% bond issue.
(d)Acquired land by issuing a ten-year,9%,$44,000 note payable.

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Question 4

Describe the format of the statement of cash flows,including the reporting of significant noncash investing and financing activities.

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Question 5

Castine reports net income of $305,000 for the year ended December 31,Year 2.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 increase in cash for Year 2.
A)$216,400.
B)$281,400.
C)$381,400.
D)$206,400.
E)$406,400.

Accepted Answer

$305,000 + $93,700 + $10,000 + $10,200 + $15,200 -$40,200 - $12,500 = $381,400
$381,400 -$75,000 - $100,000 = $206,400

Question 6

Castine reports net income of $305,000 for the year ended December 31,Year 2.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,and a $100,000 decrease in notes payable.Calculate the new cash provided (used)in operating activities using the indirect method.
A)$461,800.
B)$371,400.
C)$381,400.
D)$351,000.
E)$361,000.

Accepted Answer

$305,000 + $93,700 + $10,000 + $10,200 + $15,200 -$40,200 - $12,500 = $381,400

Question 7

Weston is preparing the company's statement of cash flows for the fiscal year just ended.Using the following information,determine the amount of cash flows from investing activities:

A)$(107,700).
B)$107,700.
C)$(200,000).
D)$(139,700).
E)$(207,700).

Accepted Answer

$92,300 - $200,000 = ($107,700)

Question 8

Define and discuss the differences between operating,investing,and financing activities.

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Question 9

Explain how the cash flows from operating activities section of the statement of cash flows is prepared using the direct method.

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Question 10

A company had average total assets of $2,316,000,total cash flows of $1,320,000,cash flows from operations of $455,000,and cash flows for plant assets of $850,000.The cash flow on total assets ratio equals:
A)17.33%.
B)20.97%.
C)53.53%.
D)34.47%.
E)19.65%.

Accepted Answer

$455,000/$2,316,000 = 19.65%

Question 11

Explain how cash flows from investing and financing activities are determined.

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Question 12

Weston is preparing the company's statement of cash flows for the fiscal year just ended.Using the following information,determine the amount of cash flows from financing activities:

A)$(168,000).
B)$200,000.
C)$168,000.
D)$(191,700).
E)$191,700.

Accepted Answer

$-100,000 + $300,000 - $32,000 = $168,000

Question 13

Explain the purpose and format of the statement of cash flows.Also describe its relevance to decision makers.

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Question 14

Define and explain significant noncash investing and financing activities and the method of reporting them on the statement of cash flows.

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Question 15

For each of the following items,indicate whether it would be classified as an (O)operating activity,an (I)investing activity,a (F)financing activity,or a significant (N)noncash financing and investing activity.
__________ (1)Received cash dividends from investments in trading securities.
__________ (2)Collected accounts receivable from customers.
__________ (3)Issued bonds payable for cash.
__________ (4)Paid wages to employees.
__________ (5)Issued stock for cash.
__________ (6)Sold equipment for cash.
__________ (7)Purchased land in exchange for a note payable.
__________ (8)Paid cash dividends.
__________ (9)Received interest from investments in trading securities.
_________ (10)Purchases of land for cash.

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Question 16

Define the cash flow on total assets ratio and explain how it is used to evaluate cash flows and to assess company performance.

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Question 17

Weston is preparing the company's statement of cash flows for the fiscal year just ended.Using the following information,determine the amount of cash flows from operating activities using the indirect method:

A)$332,200.
B)$236,800.
C)$261,400.
D)$186,800.
E)$189,400.

Accepted Answer

$182,000 + $50,000 - $12,300 - $35,400 + $28,800 + $23,700 = $236,800

Question 18

Explain how the cash flows from operating activities section of the statement of cash flows is prepared using the indirect method.

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Question 19

For each of the following items,indicate whether it would be classified as either an (O)operating activity,an (I)investing activity,a (F)financial activity,or a significant (N)noncash financing and investing activity.
__________ (1)Cash sales of merchandise.
__________ (2)Sale of land for cash.
__________ (3)Signed a note payable in exchange for cash.
__________ (4)Purchased supplies for cash.
__________ (5)Paid cash to settle an account payable.
__________ (6)Purchased a warehouse in exchange for shares of its stock.
__________ (7)Paid interest on a note payable.
__________ (8)Reissued treasury stock.
__________ (9)Purchased equipment for cash.
_________ (10)Purchased equipment in exchange for a 6-month note payable.

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Question 20

A company reported net income of $112,000,operating cash flows of $57,000,total cash flows of $97,000,and average total assets of $962,000.Calculate its cash flow on total assets ratio.

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Quiz 16: Reporting the Statement of Cash Flows

What are the five usual steps involved in the preparation of the statement of cash flows?

Explain the value of separating cash flows into operating activities,investing activities,and financing activities to financial statement users in analyzing cash flows and the company's financial performance and condition.

Describe the format of the statement of cash flows,including the reporting of significant noncash investing and financing activities.

Weston is preparing the company's statement of cash flows for the fiscal year just ended.Using the following information,determine the amount of cash flows from investing activities:

Define and discuss the differences between operating,investing,and financing activities.

Explain how the cash flows from operating activities section of the statement of cash flows is prepared using the direct method.

A company had average total assets of $2,316,000,total cash flows of $1,320,000,cash flows from operations of $455,000,and cash flows for plant assets of $850,000.The cash flow on total assets ratio equals:

Explain how cash flows from investing and financing activities are determined.

Weston is preparing the company's statement of cash flows for the fiscal year just ended.Using the following information,determine the amount of cash flows from financing activities:

Explain the purpose and format of the statement of cash flows.Also describe its relevance to decision makers.

Define and explain significant noncash investing and financing activities and the method of reporting them on the statement of cash flows.

Define the cash flow on total assets ratio and explain how it is used to evaluate cash flows and to assess company performance.

Weston is preparing the company's statement of cash flows for the fiscal year just ended.Using the following information,determine the amount of cash flows from operating activities using the indirect method:

Explain how the cash flows from operating activities section of the statement of cash flows is prepared using the indirect method.

A company reported net income of $112,000,operating cash flows of $57,000,total cash flows of $97,000,and average total assets of $962,000.Calculate its cash flow on total assets ratio.