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Exam 13: The Statement of Cash Flows

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Question 31

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When using the indirect method of preparing a statement of cash flows, which of the following items would need to be deducted from net income in order to reconcile to cash provided by operating activities?

A) Gain on sale of property, plant, and equipment
B) Decrease in prepaid insurance
C) Depreciation expense
D) Increase in salaries payable

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Question 32

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Justine Inc. has the following information available for 2011: The operating activity section of Justine's statement of cash flows would show:

A) net cash provided by operating activities of $58,000.
B) net cash utilized by operating activities of $58,000.
C) net cash utilized by operating activities of $98,000.
D) net cash provided by operating activities of $98,000.

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Question 33

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Cash paid to purchase equipment is classified in which section of the statement of cash flows?

The following information relates O'Hara Products Inc.: O'Hara's accounts payable balances are composed solely of amounts due to suppliers for inventory purchases. Required: Compute the amount that would be reported as "cash paid for purchases" on the statement of cash flows using the direct method.

BTE Corporation has the following information available for 2011: The financing activity section of BTE's statement of cash flows would show:

Which of the following is not a required external financial statement?

Given the following events, which ones affect cash flows from operating activities?

When using the indirect method of preparing a statement of cash flows, which of the following items would need to be added to net income in order to reconcile to cash provided by operating activities?

Peter Piper Inc. had the following information available from its 2011 balance sheet and income statement: What amount would be reported as cash outflows for insurance on the statement of cash flows for 2011 using the direct method?

Haley Inc. had the following information related to last year's purchases: What amount would be reported as "cash outflows for purchases" on the statement of cash flows using the direct method?

How do the direct and indirect methods of preparing the statement of cash flows differ?

Burke Inc.'s accounts receivable balance increased during the year from $300,000 to $360,000. Based on this information, which of the following statements is true?

Cash received from the sale of property, plant, and equipment is classified in which section of the statement of cash flows?

Caldwell Corp.'s cost of goods purchased amounts to $900,000 for 2011. From the beginning until the end of 2011, their accounts payable decreased by a net amount of $95,000. How much "cash outflows for purchases" should Caldwell report for 2011 on their statement of cash flows?

Felton Inc. had the following information related to last year's purchases: What amount would be reported as "cash outflows for purchases" on the statement of cash flows using the direct method?

Gregson Company had the following noncash current asset and current liabilities balances at the end of 2010 and 2011: Net income for 2011 was $750,000 and depreciation expense was $40,000. All sales and all purchases are on account. Gregson uses the indirect method for preparing the statement of cash flows. Net cash flows from operating activities for 2011 would be:

Why are noncash transactions included on the statement of cash flows? Provide an example of a noncash transaction that would be reported on the statement of cash flows.

Cash received from the sale of long-term investments is classified in which section of the statement of cash flows?

The statement of cash flows divides all transactions that affect a company's cash into three types of activities. List and briefly describe each of these activities.

MTM Inc. had the following information available from its 2011 balance sheet and income statement: Required: Compute the amount that would be reported as "cash paid for insurance" on the statement of cash flows using the direct method.