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Exam 24: The Statement of Cash Flows

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Question 41

Multiple Choice

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Bastion Corporation paid $36,500 on its mortgage loan during the year. The principal portion of the payments totaled $15,000 and the interest was $21,500. How would the $15,000 be reported on the Statement of Cash Flows?

A) an outflow of cash under the investing activities section
B) an outflow of cash under the operating activities section
C) an outflow of cash under the financing activities section
D) a disclosure of the interest paid

E) A) and C)
F) B) and C)

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Question 42

Multiple Choice

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When calculating the net cash provided by operating activities, an increase in income taxes payable is:

A) subtracted from the net cash amount after other calculations have been made.
B) subtracted from the net income.
C) added to the net income.
D) not used in the calculation.

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

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Question 43

Multiple Choice

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The income statement reports a loss of $5,000 from the sale of equipment. As a result, the statement of cash flows would report a:

Interest expense is treated as an outflow of cash from a financing activity.

Polyglot Services, Inc. sold equipment that cost $52,800 for $14,650 cash. The accumulated depreciation on the equipment on the date of the sale amounted to $37,600. What amount is reported in the Cash Flows from Investing Activities section of the Statement of Cash Flows for this sale of equipment?

The following information is taken from the accounting records of the Gilford Corporation. Use this information to prepare Gilford's statement of cash flows for the year ended December 31, 2019. (a)Plant construction costing $40,000 in cash was completed. (b)Equipment was purchased for $20,000 in cash. (c)Common stock was sold for $50,000 in cash. (d)Bonds were issued for $15,000 in cash. (e)Common stock dividends of $20,000 were paid in cash. (f)Net income after income taxes was $35,000.

A list of sources and uses of cash are given below. Select on the line provided whether each is an operating, investing, or financing activity. -borrowing through a note payable

Why are depreciation expense and amortization expense added to Net Income under the indirect method?

How might management utilize the Statement of Cash Flows in evaluating operations?

Issuing stock for cash and paying dividends in cash would be classified as------------ on the statement of cash flows.

Use the following information for the questions. The Dolmen Company Income Statement For the Year Ended June 30, 2019 The Dolmen Company Comparative Balance Sheet June 30, 2019 Liabilities and Stockholders' Equity Additional information: Equipment costing $100,000 was sold for $70,000. Accumulated depreciation on this equipment was $20,000. Dividends of $38,000 were declared and paid in 2019. Bonds were issued at face value of $300,000. Common stock of $55,000 was issued to acquire land. Investments (stock in IBM) were purchased for $275,000. -Using the information provided, prepare the cash flows from financing activities for The Dolmen Company.

A list of sources and uses of cash are given below. Indicate on the line provided whether each is an (O) operating, (I) investing, (F) financing, or a significant (N) noncash financing and investing activity. -gain on sale of land

The following transactions occurred at the Lionel Corporation in 2019. Use this information to prepare Lionel's schedule of cash flows from financing activities. A)The company issued 450 shares of its $50 par value common stock at par. B)Cash dividends of $26,000 were paid on common stock during the year.

Use the following information for the questions. The Dolmen Company Income Statement For the Year Ended June 30, 2019 The Dolmen Company Comparative Balance Sheet June 30, 2019 Liabilities and Stockholders' Equity Additional information: Equipment costing $100,000 was sold for $70,000. Accumulated depreciation on this equipment was $20,000. Dividends of $38,000 were declared and paid in 2019. Bonds were issued at face value of $300,000. Common stock of $55,000 was issued to acquire land. Investments (stock in IBM) were purchased for $275,000. -Using the information provided, prepare the cash flows from investing activities for The Dolmen Company.

A list of sources and uses of cash are given below. Select on the line provided whether each is an operating, investing, or financing activity. -dividend income

Echt Manufacturing sold equipment that originally cost $78,400 for $54,300 cash on April 1, 2019. This equipment was purchased on January 2, 2017, had a salvage value of $8,400, a useful life of ten years, and was depreciated under the straight-line method of depreciation. How will this transaction be reported on Echt's 2019 Income Statement? How will this transaction be reported on the Statement of Cash Flows for 2019? (Assume that the indirect method was used.)

A list of sources and uses of cash are given below. Indicate on the line provided whether each is an (O) operating, (I) investing, (F) financing, or a significant (N) noncash financing and investing activity. -repaid a long-term note payable

A list of sources and uses of cash are given below. Indicate on the line provided whether each is an (O) operating, (I) investing, (F) financing, or a significant (N) noncash financing and investing activity. -collected accounts receivable from customers

List some examples of transactions or activities within a company that must be disclosed in the Statement of Cash Flows.

Eleemosynary Organization acquired land valued at $56,000 for 4,200 shares of its stock. Where on the Statement of Cash flows is this transaction reported?