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Exam 16: Statement of Cash Flows

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Question 61

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If a gain of $11,000 is realized in selling (for cash) office equipment having a book value of $55,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

A) $44,000
B) $11,000
C) $55,000
D) $66,000

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

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Question 62

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Accounts receivable resulting from sales to customers amounted to $40,000 and $31,000 at the beginning and end of the year, respectively. Income reported on the income statement for the year was $120,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is

A) $120,000.
B) $129,000.
C) $151,000.
D) $111,000.

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

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Question 63

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Sales reported on the income statement were $372,000. The accounts receivable balance declined $4,500 over the year. The amount of cash received from customers was $367,500.

Balances of the current asset and current liability accounts at the end and beginning of the year are as follows: Use the direct method to prepare the cash flows from operating activities section of a statement of cash flows.

Complete each of the columns on the table below, indicating in which section each item would be reported on the statement of cash flow (Operating, Investing, or Financing), the amount that would be reported, and whether the item would create an increase or decrease in cash. For item that affect more than one section of the statement, indicate all affected. Assume the indirect method of reporting cash flows operating activities. The first item has been completed as an example.

Income tax was $175,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and end of the year. Cash payments for income tax reported on the cash flow statement using the direct method is

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

Fortune Corporation's comparative balance sheet for current assets and liabilities was as follows: Adjust 2012 net income of $65,000 for changes in operating assets and liabilities to arrive at cash flows from operating activities using the indirect method.

Under the direct method of preparing a Statement of Cash Flows, the gain on the sale of land is not adjusted or reported as part of cash flows from operating activities.

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

Based on the following, what is free cash flow? Operations includes $2,000 for depreciation. Investing includes the purchase of a replacement asset for $100,000 and the sale of the one used in production, which is now obsolete, for $70,000. Financing is made up of $70,000 of borrowing and $25,000 of dividends paid.

To determine cash payments for income tax for the cash flow statement using the direct method, an increase in income taxes payable is added to the income tax expense.

Cash outflows from financing activities include the payment of cash dividends, the acquisition of treasury stock, and the repayment of amounts borrowed.

The acquisition of land in exchange for common stock is an example of noncash investing and financing activity.

If accounts payable have increased during a period

On the basis of the following data for Larson Co. for the year ending December 31, 2011 and the preceding year ended December 31, 2010, prepare a statement of cash flows. Use the indirect method of reporting cash flows from operating activities. In addition to the balance sheet data, assume that: Equipment costing $125,000 was purchased for cash. Equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000. The stock was issued for cash. The only entries in the retained earnings account were net income of $51,000 and cash dividends declared of $13,000.

Which of the following types of transactions would be reported as a cash flow from investing activity on the statement of cash flows?

There is no difference in the Investing and Financing sections of the statement of cash flows using the indirect and direct method.

The comparative balance sheet of Posner Company, for 2011 and the preceding year ended December 31, 2010, appears below in condensed form: The income statement for the current year is as follows: Additional data for the current year are as follows: Prepare a statement of cash flows, using the indirect method of reporting cash flows from operating activities.

Land costing $71,000 was sold for $50,000 cash. The loss on the sale was reported on the income statement as other expense. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land?