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Exam 14: Statement of Cash Flows

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Question 81

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There are two alternatives to reporting cash flows from operating activities in the statement of cash flows: 1) the direct method and 2) the indirect method.

A) True
B) False

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Question 82

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Under the direct method of preparing a statement of cash flows, the gain on the sale of land is not adjusted or reported as part of cash flows from operating activities.

A) True
B) False

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Question 83

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Cash flow per share is

The comparative balance sheets of Posner Company, for Years 1 and 2 ended December 31, appear below in condensed form: Additional data for the current year are as follows: a) Fully depreciated equipment costing $60,000 was scrapped, no salvage, and new equipment was purchased for $183,200. b) Bonds payable for $100,000 were retired by payment at their face amount. c) 5,000 shares of common stock were issued at $13 for cash. d) Cash dividends declared and paid, $25,000. Prepare a statement of cash flow, using the indirect method of reporting cash flows from operating activities.

On the basis of the following data for Larson Co. for the year ending December 31 Year 2, and the preceding year ended December 31 Year 1, prepare a statement of cash flows. Use the indirect method of reporting cash flows from operating activities. In addition to the balance sheet data, assume that: Equipment costing $125,000 was purchased for cash. Equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000. The stock was issued for cash. The only entries in the retained earnings account were net income of $51,000 and cash dividends declared of $13,000.

In preparing the cash flows from operating activities section of the statement of cash flows by the indirect method, the amortization of bond discount for the period is deducted from the net income for the period.

Net income was $51,000 for the year. The accumulated depreciation balance increased by $14,000 over the year. There were no sales of fixed assets or changes in noncash current assets or liabilities. Under the indirect method, the cash flow from operations is $37,000.

Cash flows from investing activities, as part of the statement of cash flows, would include any payments for the purchase of treasury stock.

The operating cash flow available for company use after purchasing the fixed assets that are necessary to maintain current productive capacity is called the

The board of directors of Kendall Co. declared cash dividends totaling $390,000 during the current year. The comparative balance sheet indicates dividends payable of $58,000 at the beginning of the year and $73,000 at the end of the year. What was the amount of cash payments Kendall Co. made to stockholders during the year?

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

If accounts payable have increased during a period,

Which of the following can be found on the statement of cash flows?

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. -decrease in accounts payable balance

The following two scenarios are independent of one another. 1) An analysis of the general ledger accounts indicates that office equipment was sold for $39,600 during the year. The equipment originally cost $68,000 and had accumulated depreciation of $22,500 on the date of sale. Indicate how the elements of this transaction would be reported on the statement of cash flows using the indirect method. 2) An analysis of the general ledger accounts indicates that delivery equipment, which cost $97,000 and on which accumulated depreciation totaled $42,100 on the date of sale, was sold for $57,500 during the year. Using this information, indicate the items to be reported on the statement of cash flows.

Which of the following does not represent an outflow of cash and therefore would not be reported on the statement of cash flows as a use of cash?

On the statement of cash flows, the cash flows from operating activities section would include

Balances of the current asset and current liability accounts at the end and beginning of the year are as follows: Use the direct method to prepare the cash flows from operating activities section of a statement of cash flows.

Changes in current assets and current liabilities are reported on the statement of cash flows, indirect method, in the

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