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Exam 12: Statement of Cash Flows

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Question 1

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Howard Co.purchased land costing $25,000 by paying $8,000 cash and issuing a note payable for the remaining balance.

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Question 2

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The amount of revenue a company recognizes on the income statement normally differs from the amount of cash collected from customers.

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The three main sections of the statement of cash flows are,in order,operating activities,investing activities,and financing activities.

What is the purpose of the statement of cash flows?

A cash payment to purchase treasury stock is reported on the statement of cash flows as a financing activity.

Grace Company sold equipment for $40,000 cash.The equipment has cost $70,000 and had accumulated depreciation of $44,000 at the time of the sale.Based on this information alone,select the true statement.

Marvel Company sold land that cost $440,000 for $470,000 cash.Indicate whether each of the following statements is true or false regarding Marvel's statement of cash flows (SCF). _____ a)If Marvel uses the direct method,there would be a $30,000 cash inflow in the operating section of the SCF. _____ b)If Marvel uses the indirect method to prepare the statement of cash flows,the gain on the sale of the land would be added to net income in calculating the cash flows from operating activities. _____ c)Marvel would report the event in the investing activities section of the SCF the same way whether it uses the direct method or the indirect method. _____ d)Marvel would disclose the event as a noncash investing and financing activity. _____ e)Marvel would report a $470,000 cash inflow in the investing section of the SCF.

When using the indirect method to prepare the statement of cash flows,an increase in noncash current assets is

Howard Co.declared and paid a $1.50 per share cash dividend on the 20,000 shares of its common stock.

The Burgess Company reported the following partial list of accounts,beginning and ending balances and results for 2016: Required: Present in good form the cash flows from operating activities section of a statement of cash flows using the direct method.

When preparing a statement of cash flows,in which section is it permitted to use either the direct method or the indirect method?

Indicate whether each of the following statements regarding the statement of cash flows (SCF)is true or false. _____ a)Purchase of treasury stock would appear in the financing section of the SCF. _____ b)Purchase of merchandise on account would appear in the operating section of the SCF. _____ c)Payment of an account payable is an operating activity. _____ d)Purchase of office supplies for cash would appear in the operating section of the SCF. _____ e)Declarations of cash dividends would appear in the financing section of the SCF.

Bristol Corporation reported a $6,200 balance in accounts receivable on January 1,2016.During the year $49,600 of sales on account were made.If the ending balance of accounts receivable amounts to $25,000,what is the amount of cash received from customers?

Which of the following is a correct statement of one of the rules for converting net income to the cash flow from operating activities using the indirect method?

On January 1,2016,the Chisolm Company purchased equipment for $36,000 cash.On December 31,2016,depreciation of $9,000 was recorded.Which of the following correctly shows the combined effect of these two events on the income statement and statement of cash flows? Chisolm uses the direct method.

Which of the following cash transactions would not be shown under operating activities?

When the indirect method is used to prepare the operating activities section of the statement of cash flows,are increases in current liabilities added or subtracted from net income to arrive at the net cash flow?

The Anton Company reported a beginning balance of $13,200 and an ending balance of $14,400 in its Unearned Revenue account for 2016.During the year,$36,000 of revenue (previously unearned) was recognized.Considering only this information,how much cash was received from customers?

Use the following to answer questions The following data is supplied from the comparative balance sheets and income statement information from Moreno,Inc.Moreno uses the indirect method to prepare the statement of cash flows.Net income for 2016 was $40,000.No long term assets were sold during the year.During 2016,Moreno paid dividends of $24,000. Use the following to answer questions 128 ― 130: -Prepare the investing activities section of Moreno's statement of cash flows.

Indicate whether each of the following statements regarding the statement of cash flows (SCF)is true or false. _____ a)Purchase of merchandise inventory on account would appear in the operating activities section of the SCF. _____ b)Sale of treasury stock would appear in the investing section of the SCF. _____ c)Cash proceeds from the sale of a used truck would appear in the operating section of the SCF. _____ d)Purchase of investment securities would appear in the investing activities section of the SCF. _____ e)Payment of salaries would appear in the operating section of the SCF.