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Exam 11: The Statement Of Cash Flows

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Question 21

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The following items were obtained from the financial records: How would the change in accounts receivable be reported in the operating activities section of the statement of cash flows under the indirect method?

A) As an addition to sales.
B) As a deduction from sales.
C) As an addition to net income.
D) As a deduction from net income.

E) A) and B)
F) None of the above

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Question 22

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On December 31 of the current year, a restaurant purchased a $19,000 truck to be used for catering. It made a down payment of one-fourth of the purchase price. What combination of amounts would affect the current year income statement and statement of cash flows for the purchase of the truck? ?

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Question 23

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Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. (Choices may be used more than once.) -Declared stock dividends.

When using the direct method to determine operating cash flows, how is the retirement of bonds payable at their maturity date shown on the Statement of Cash Flows?

A company reported the following information in its current year annual report: What is the cash flow adequacy ratio for the current year?

A company reported the following information: Assuming all merchandise purchases were on account, how much cash was paid to suppliers for merchandise purchases during 2020?

Match these terms with their correct definition. -Provides information that can be used to judge a company's ability to meet its obligations and pay dividends.

When using the direct method to determine operating cash flows, how are salaries paid to employees reported on the Statement of Cash Flows?

____________________ activities involve long-term liabilities and stockholders' equity.

Which balance sheet accounts are most affected by investing activities?

Match these terms with their correct definition. -Determines operating cash flow by adjusting each item on the income statement by the changes in the related current asset or liability accounts.

Which of the following is not an operating activity?

Under the ____________________ method of preparing a statement of cash flows, the net cash flow from operating activities is computed by adjusting net income to remove the effect of all deferrals of past operating cash receipts and payments, and all accruals of future operating cash receipts or payments.

The Statement of Cash Flows is considered to be a good indicator of current cash inflows and outflows.

Use the following codes to indicate how the cash flow effect, if any, of each transaction would be reported on a statement of cash flows if the operating activities section is prepared using the direct method. (Choices may be used more than once.) -Sold common stock for cash.

Merry Maids Company Merry Maids Company began 2019 with a cash and cash equivalents balance of $7,670. Consolidated statements of cash flows for the years ended December 31, 2020 and 2019, are presented below: -Refer to Merry Maids Company. What is the significance of the positive amounts shown in both years for accounts payable and accrued liabilities?

Free cash flow is equal to net cash flow from operating activities minus capital expenditures and dividends.

Operating cash flows generally involve income statement items (which are reflected in Retained Earnings) and balance sheet items (such as changes in current assets and current liabilities).

Maytag Corporation's balance sheets for the last 2 years are provided below: The company's income statement for 2020 is provided below: *The company sold equipment for $57 which had a cost of $60. A) Prepare the company's Statement of Cash flows for 2020. Use the direct method of computing cash flows from operating activities. B) Prepare the Cash Flows from Operating Activities section of the cash flow statement using the indirect method.

Match these terms with their correct definition. -Measures the company's ability to meet its maturing debt obligations