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Exam 13: Statement of Cash Flows

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Question 31

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The comparative balance sheet of Barry Company for Years 1 and 2 ended December 31 appears below in condensed form: Additional data for the current year are as follows: (a)Net income, $75,800.(b)Depreciation reported on income statement, $38,000.(c)Fully depreciated equipment costing $60,000 was scrapped, no salvage, and equipment was purchased for $150,000.(d)Bonds payable for $75,000 were retired by payment at their face amount.(e)2,500 shares of common stock were issued at $30 for cash.(f)Cash dividends declared and paid, $40,000.(g)Investments of $100,000 were sold for $125,000.​ Prepare a statement of cash flows using the indirect method.

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Question 32

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For each of the following activities that may take place during the accounting period, indicate the effect (a-g) on the statement of cash flows prepared using the indirect method. Choices may be selected as the answer for more than one question.a.Increase cash from operating activities b.Decrease cash from operating activities c.Increase cash from investing activities d.Decrease cash from investing activities e.Increase cash from financing activities f.Decrease cash from financing activities g.Noncash investing and financing activity -Purchase of equipment

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Question 33

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Fortune Corporation's comparative balance sheet for current assets and liabilities was as follows: Adjust Year 2 net income of $65,000 for changes in operating assets and liabilities to arrive at cash flows from operating activities using the indirect method.

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

In preparing the statement of cash flows, the correct order of reporting cash activities is financing, operating, and investing.

On the statement of cash flows, the cash flows from financing activities section would include all of the following except

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

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.

A business issues 20-year bonds payable in exchange for preferred stock. This transaction would be reported on the statement of cash flows in

Which of the following would not be classified as an operating activity?

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

Sales reported on the income statement were $690,000. The accounts receivable balance declined $39,000 over the year. Determine the amount of cash received from customers.

Which of the following is not one of the four basic financial statements?

The statement of cash flows shows the effects on cash of a company's operating, investing, and financing activities.

There is no difference in the investing and financing sections of the statement of cash flows using the indirect and direct 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.

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

Which of the following is a noncash investing and financing activity?

The net income reported on the income statement for the current year was $275,000. Depreciation recorded on fixed assets and amortization of patents for the year were $40,000 and $9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?

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