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Exam 12: Reporting Cash Flows

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Question 31

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The cash flow on total assets ratio is computed by dividing cash flows from operations by average total assets.

A) True
B) False

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Question 32

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The indirect method separately lists each major item of operating cash receipts and cash payments.

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B) False

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Question 33

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A company had net cash flows from operations of $120,000, cash flows from financing of $330,000, total cash flows of $500,000, and average total assets of $2,500,000. The cash flow on total assets ratio equals:

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

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

In preparing Marjorie Company's statement of cash flows for the most recent year, the following information is available: \begin{array}{llcc} \text { Purchase of equipriert} &\$260,000 \\ \text { Proceeds from the sale of equiprnent } &87,000\\ \text { Purchase of lard } &91,000\\end{array} Net cash flows from investing activities for the year were:

A company had average total assets of $3,216,000, total cash flows of $1,320,000, cash flows from operations of $554,000, and cash flows for plant assets of $850,000. The cash flow on total assets ratio equals:

Fernwood Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $233,000 Cash dividends declared for the year 50,000 Proceeds from the sale of equipment 85,000 Gain on the sale of equipment 4,500 Cash dividends payable at the beginning of the year 22,000 Cash dividends payable at the end of the year 30,000 Net income for the year 110,000

The cash flow on total assets ratio:

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

________ activities include those transactions that affect long-term liabilities and equity.

Noncash financing and investing activities are disclosed in a ________ or in a separate ________.

The statement of cash flows explains the difference between the beginning and ending balances of cash and cash equivalents.

A machine with a cost of $130,000 and accumulated depreciation of $85,000 is sold for $50,000 cash. The amount that should be reported in the operating activities section reported under the direct method is:

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

The statement of cash flows reports all but which of the following:

Noncash investing and financing activities may be disclosed in:

Use the following information to calculate cash paid for wages and salaries: $\begin{array} { | l | r | } \hline \text { Salaries expense } & \$ 168,000 \\\hline \text { Salaries payable, January 1 } & 6,400 \\\hline \text { Salaries payable, December } 31 & 10,600 \\\hline\end{array}$

Based on the following information provided about a company's operations, calculate its cost of goods purchased and its cash paid for merchandise. $\begin{array}{c}\begin{array}{|l|}\hline \text { Cost of goods sold.}\\\hline \text { Merchandise inventory, beginning year .}\\\hline \text { Accounts payable, beginning year.}\\\hline \text { Merchandise inventory, end-of-year.}\\\hline \text { Accounts payable, end-of-year.}\\\hline \end{array}\begin{array}{r|}\hline\$ 522,000 \\\hline 70,000 \\\hline 53,000 \\\hline 57,000 \\\hline 48,000 \\\hline \end{array}\end{array}$

Probably the most important section of the statement of cash flows in analyzing the financial performance of a company's ongoing business is the ________ section.