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Exam 12: Statement of Cash Flows

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Question 21

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Krech Corporation's comparative balance sheet appears below: The company's net income (loss) for the year was ($3,000) and its cash dividends were $3,000. It did not sell or retire any property, plant, and equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities. Which of the following is correct regarding the operating activities section of the statement of cash flows?

A) The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be subtracted from net income
B) The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be subtracted from net income
C) The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be added to net income
D) The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be added to net income

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

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Question 22

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Buckley Corporation's most recent comparative balance sheet appears below: The company's net income for the year was $91 and it paid a cash dividend of $22. It did not dispose of any property, plant, and equipment during the year. The company did not retire any bonds payable or repurchase any of its own common stock. The free cash flow for the year was:

A) ($8)
B) $14
C) $128
D) $308

E) All of the above
F) A) and B)

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Question 23

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The following events occurred last year at Dorder Corporation: Based on the above information, the cash provided (used) by investing activities for the year on the statement of cash flows would net to:

Beltram Corporation's balance sheet and income statement appear below: The company did not dispose of any property, plant, and equipment, issue any bonds payable, or repurchase any of its own common stock during the year. The company declared and paid a cash dividend of $13. Required: Prepare a statement of cash flows in good form using the indirect method.

Alcoser Corporation's most recent balance sheet appears below: Net income for the year was $60. Cash dividends were $12. The company did not dispose of any property, plant, and equipment. It did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) investing activities for the year was:

Stone Retail Corporation's most recent comparative Balance Sheet is as follows: Stone's net income was $46,000. No equipment was sold or purchased. Cash dividends of $40,000 were declared and paid. Stone uses the indirect method to prepare its statement of cash flows. What is Stone's net cash provided by (used in) financing activities?

Autry Corporation's balance sheet and income statement appear below: Cash dividends were $40. The company sold equipment for $19 that was originally purchased for $6 and that had accumulated depreciation of $4. The net cash provided by (used in) investing activities for the year was:

McCorey Corporation recorded the following events last year: On the statement of cash flows, some of these events are classified as operating activities, some are classified as investing activities, and some are classified as financing activities. Based solely on the information above, the net cash provided by (used in) financing activities on the statement of cash flows would be:

Salsedo Corporation's balance sheet and income statement appear below: Cash dividends were $9. The company sold equipment for $15 that was originally purchased for $10 and that had accumulated depreciation of $5. It did not issue any bonds payable or repurchase any of its own common stock. The net cash provided by (used in) operating activities for the year was:

The Warrel Corporation reported the following data for last year: Based solely on this information, the net cash provided (used) by financing activities on the statement of cash flows would be:

Adah Corporation prepares its statement of cash flows using the indirect method. Which of the following would be subtracted from net income in the operating activities section of the statement?

Investing activities on the statement of cash flows generate cash inflows and outflows related to borrowing from and repaying principal to creditors and completing transactions with the company's owners such as selling or repurchasing shares of common stocks and paying dividends.

Clayborn Corporation's net cash provided by operating activities was $111,000; its net income was $101,000; its income taxes were $43,000; its capital expenditures were $90,000; and its cash dividends were $28,000. Required: Determine the company's free cash flow.

Megan Corporation's net income last year was $98,000. Changes in the company's balance sheet accounts for the year appear below: The company paid a cash dividend of $36,000 and it did not dispose of any long-term investments or property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows. The net cash provided by (used in) investing activities last year was:

Negative free cash flow does not automatically signal poor performance.

Shoshoni Corporation prepares its statement of cash flows using the indirect method. Which of the following would be added to net income in the operating activities section of the statement?

Furis Corporation's cash and cash equivalents consist of cash and marketable securities. Last year the company's cash account decreased by $12,000 and its marketable securities account increased by $19,000. Cash provided by operating activities was $18,000. Net cash used in financing activities was $12,000. Based on this information, the net cash flow from investing activities on the statement of cash flows was:

Negative free cash flow suggests that the company generated enough cash flow from its operating activities to fund its capital expenditures and dividend payments.

Excerpts from Aultman Corporation's comparative balance sheet appear below: Which of the following is the correct treatment within the operating activities section of the statement of cash flows using the indirect method?

The following transactions occurred last year at Jolly Corporation: Based solely on the above information, the net cash provided by financing activities for the year on the statement of cash flows would be: