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Exam 13: Statement of Cash Flows

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Question 51

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

A) True
B) False

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Question 52

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For each of the following, identify whether it would be disclosed as an operating (O), financing (F), or investing (I) activity on the statement of cash flows under the indirect method. a. Received dividends b. Paid of dividends c. Purchased of equipment d. Net income e. Issued company's common stock f. Amortization expense

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a. O - operating
b. F - finan...

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Question 53

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An analysis of the general ledger accounts indicates that equipment, with an original cost of $200,000 and accumulated depreciation of $170,000 on the date of sale, was sold for $20,000 during the year.  Using this information, indicate the items to be reported on the statement of cash flows using the indirect method.

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in

A building with a book value of $54,000 is sold for $63,000 cash.  Using the indirect method, this transaction should be shown on the statement of cash flows as follows:

Cash dividends of $45,000 were declared during the year.  Cash dividends payable were $10,000 at the beginning of the year and $15,000 at the end of the year.  The amount of cash for the payment of dividends during the year is

Cash receipts received from the issuance of a mortgage notes payable would be classified as a(n)

Sales for the year were $600,000. Accounts receivable were $100,000 and $80,000 at the beginning and end of the year, respectively.  Cash received from customers to be reported on the statement of cash flows using the direct method is

The comparative balance sheets of Posner Company, for Years 1 and 2 ended December 31, appear below in condensed form: The income statement for the current year is as follows: Additional data for the current year are as follows: (a) Fully depreciated equipment costing $60,000 was scrapped, no salvage, and new equipment was purchased for $183,200. (b) Bonds payable for $100,000 were retired by payment at their face amount. (c) 5,000 shares of common stock were issued at $13 for cash. (d) Cash dividends declared and paid, $25,000. Prepare a statement of cash flow, using the indirect method of reporting cash flows from operating activities.

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

Cash paid for preferred stock dividends should be shown on the statement of cash flows under

The cash flows from operating activities are reported by the direct method on the statement of cash flows.  Determine the following: (a) If sales for the current year were $695,000 and accounts receivable decreased by $43,500 during the year, what was the amount of cash received from customers? (b) If income tax expense for the current year was $56,000 and income tax payable decreased by $5,200 during the year, what was the amount of cash payments of income tax?

Selected data taken from the accounting records of Laser Inc. for the current year ended December 31 are as follows: During the current year, the cost of merchandise sold was $448,500, and the operating expenses other than depreciation were $78,000. The direct method is used for presenting the cash flows from operating activities on the statement of cash flows. Required: Determine the amount reported on the statement of cash flows for: (a)  Cash payments for merchandise (b)  Cash payments for operating expenses

Cash paid for equipment would be reported on the statement of cash flows in

The net income reported on an income statement for the current year was $63,000.  Depreciation recorded on fixed assets for the year was $24,000.  Balances of the current asset and current liability accounts at the end and beginning of the year are listed below.  Prepare the Cash Flows from Operating Activities section of the statement of cash flows using the indirect method.

To determine cash payments for operating expenses for the statement of cash flows using the direct method, a decrease in prepaid expenses is added to operating expenses other than depreciation.

Equipment with an original cost of $75,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000.  As a result of this transaction, cash would

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

The cash flows from operating activities are reported by the direct method on the statement of cash flows.  Determine the following: (a) If sales for the current year were $375,000 and accounts receivable increased by $29,000 during the year, what was the amount of cash received from customers? (b) If income tax for the current year was $39,000 and income tax payable decreased by $21,000 during the year, what was the amount of cash payments for income tax?

Cash flows from financing activities, as part of the statement of cash flows, would include any payments for dividends.