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Exam 13: Statement of Cash Flows

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Question 1

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A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements: *Relates solely to the acquisition of inventory What will appear in the operating activities section related to accounts receivable?

A) The increase of $58,000 will be subtracted from sales revenue.
B) The increase of $58,000 will be added to net income.
C) The increase of $58,000 will be subtracted from net income.
D) The increase of $58,000 will be added to sales revenue.

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Question 2

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The correct order of the sections on a statement of cash flows is

A) operating, investing, financing.
B) financing, investing, operating.
C) investing, operating, financing.
D) operating, financing, investing.

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Question 3

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A company uses the indirect method to prepare the statement of cash flows. The board of directors declared $165,000 in common stock dividends during the year. At the beginning of the year, there were $48,000 in dividends payable on common stock; and, $44,000 dividends payable at the end of the year. Answer the following questions: (a)What was the amount of cash paid for dividends during the year? (b)Where will this amount appear on the statement of cash flows? (c)How would the amount appear if the company uses the direct method to prepare the statement?

Use the direct method of cash flows to answer the question. Compute the change in accounts receivable during the year.

Where are noncash investing and financing activities reported?

Which of the following sections from the statement of cash flows includes purchases and sales of long-term assets?

Using the direct method to prepare the statement of cash flows, cash payments for merchandise inventory is categorized on the statement of cash flows as

When a company uses the direct method to present the statement of cash flows, the payment of cash dividends reduces the amount of net cash provided by operating activities.

Which of the following would be considered an operating activity on the statement of cash flows?

The ________ activities section from the statement of cash flows includes cash loans paid to others and cash collections on loans from issuing long-term debt.

The managerial accountant at the Clothing Factory is required to determine the amount of cash received from consumers during the year. The managerial accountant reported that the beginning balance in accounts receivable on January 1, 20X2 was $600,000. There were $10,200,000 in sales revenue recorded on the income statement, and the ending balance in accounts receivable on December 31, 20X2 was $420,000. Calculate the amount of cash collections at the Clothing Factory during 20X2 and discuss how the managerial accountant can ensure that all cash transactions from operating activities are recorded during the year. What occurs when accounts receivable increases? What occurs when accounts receivable decreases?

The statement of cash flows does not report why cash increased or decreased during the period.

Which of the following would be presented differently on the statement of cash flows under the direct method versus the indirect method?

A statement of cash flows is generated to show

An outflow of cash from an investing activity would be

In a company that uses the direct method to prepare the statement of cash flows, the amount of cash it pays in interest expense is computed as

When a company uses the direct method to present the statement of cash flows, cash received from the sale of a long-term asset increases the amount of net cash provided by investing activities.

Which of the following would appear on a statement of cash flows prepared using the direct method?

On the statement of cash flows, which of the following sections would include the purchase of a building paid for with cash?

A company uses the direct method to prepare the statement of cash flows. It presents the following amounts on its financial statements. *Relates solely to the acquisition of inventory What will appear in the operating activities section related to salaries payable?