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Exam 12: Reporting and Analyzing Cash Flows

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Question 31

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When preparing the operating activities section of the statement of cash flows using the indirect method,depreciation is added to net income.

A) True
B) False

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Question 32

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Accounting standards require companies to include a statement of cash flows in a complete set of financial statements.

A) True
B) False

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Question 33

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A company's income statement showed the following: net income,$124,000 and depreciation expense,$30,000.An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; and accounts payable increased $3,400.Calculate the net cash provided or used by operating activities.

A company reported net income of $132,000,operating cash flows of $87,000,total cash flows of $112,000,and average total assets of $1,053,000.Calculate its cash flow on total assets ratio.

The payment of cash dividends to shareholders is classified as a financing activity.

Which one of the following is representative of typical cash flows from operating activities?

Addams Corporation paid cash dividends totaling $75,000 during its most recent fiscal year.How should this information be reported on Addams's statement of cash flows?

The accountant for Mandarin Company is preparing the company's statement of cash flows for the fiscal year just ended.The following information is available: What is the amount of cash dividends paid that should be reported in the financing section of the statement of cash flows?

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

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:

A company had net cash flows from operations of $341,000,net income of $286,000 and average total assets of $1,850,000.The cash flow on total assets ratio equals:

The FASB recommends that the operating section of the statement of cash flows be reported using the direct method.

Use the following information and the indirect method to calculate the net cash provided or used by operating activities:

For each of the following independent cases,use the information provided to calculate the missing cash inflow or cash outflow using the direct method.

A company purchased equipment for $150,000 by paying $50,000 and signing a $100,000 note payable.The entire transaction is disclosed to users in the financing section of the statement of cash flows.

When preparing a statement of cash flows using the indirect method,each of the following should be classified as an operating cash flow except:

Use the following income statement and information about changes in noncash current assets and liabilities to (1)prepare only the cash flows from operating activities section of the statement of cash flows using the indirect method and (2)compute the company's cash flow on total assets ratio for the year assuming that average total assets are $525,250. Changes in current asset and current liability accounts for the year that relate to operations follow.

Based on the following information provided about a company's operations,calculate its cost of goods purchased and its cash paid for merchandise.

Use the following company information to calculate net cash provided or used by investing activities: (a)Equipment with a book value of $175,000 and an original cost of $300,000 was sold at a loss of $17,000. (b)Paid $62,000 cash for a new truck. (c)Sold land costing $32,000 for $36,000 cash,realizing a $4,000 gain. (d)Purchased treasury stock for $61,000 cash. (e)Long-term investments in stock are sold for $41,000 cash,realizing a gain of $3,500.

Cash paid for merchandise is an operating activity.