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Exam 21: The Statement of Cash Flows Revisited

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Question 31

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Transactions that involve merely purchases or sales of cash equivalents generally are not reported on a statement of cash flows. Describe an exception to this generalization. What is the essential characteristic of the transaction that qualifies as an exception?

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Transactions that involve merely transfe...

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Question 32

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Which of the following is not required by generally accepted accounting principles?

A) Cash flow per share.
B) Earnings per share.
C) Statement of cash flows.
D) Disclosure notes.

E) A) and B)
F) A) and D)

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Question 33

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Amounts held in cash equivalent investments must be reported separately from amounts held as cash in the statement of cash flows.

A purchase of equipment for cash is:

In its 2018 Annual Report to Shareholders, Kinney Inc. reported the following Consolidated Statement of Cash Flows: For the years ended December 31, -Kinney reported cost of goods sold of $168,114,150 in its fiscal 2018 income statement. Compute Kinney's net inventory purchases during the year.

When using the indirect method to determine cash flows from operating activities, an increase in prepaid expenses should be reported as:

In preparation for developing its statement of cash flows for the year ended December 31, 2018, Millennium Solutions, Inc. collected the following information: Required: 1. Prepare the investing activities section of Millennium's statement of cash flows for 2018. 2. Prepare the financing activities section of Millennium's statement of cash flows for 2018.

Lite Travel Company's accounting records include the following information: Payments to suppliers $~~~~~~~~~~~~~~~\$ 50,000$ Collections on accounts receivable $~~~~~~~~~~~~~~~79,000$ Cash sales $~~~~~~~~~~~~~~~ 44,000$ What is the amount of net cash provided by operating activities indicated by the amounts provided?

In its 2018 Annual Report to Shareholders, Kinney Inc. reported the following Consolidated Statement of Cash Flows: For the years ended December 31, -Assuming the decrease in accrued expenses during fiscal year 2018 included a $14,000 reduction due to interest on debt, compute the interest expense (net) for Kinney in that year.

Companies may report interest received and dividends received as investing activities using:

When reporting operating activities by the indirect method in a statement of cash flows:

In its 2018 Annual Report to Shareholders, Henchman & Co. provided the following Statement of Cash Flows: $\begin{array} { | l | r | r | } \hline \text { Years ended December 31 (\$ in millions) } & 2018 & 2017 \\\hline \text { Financing Activities } & & \\\hline \text { Proceeds from issuance of long-term debt } & 1,491 & \\\hline \text { Proceeds from equity security units } & 690 & \\\hline \text { Borrowings under lines of credit } & 1,173 & \\\hline \text { Repayment of borrowings under lines of Credit } & ( 1,306 ) & ( 175 ) \\\hline \text { Principal payments of long-term debt/lease } & & \\\text { agreements } & ( 119 ) & ( 485 ) \\\hline \text { Proceeds from issuance of stock } & { 8 2 5 } & 19 \\\hline \text { Dividends paid } & ( 158 ) & ( 114 ) \\\hline \text { Other financing activities } & \underline{( 64 )} & -\\\hline \text { Net cash provided by (used in) financing } & & \\\text { activities } & { 2 , 5 3 2 } & ( 755 ) \\\hline \text { Increase in cash and cash equivalents } & 145 & 177 \\\hline \text { Cash and cash equivalents at beginning of year } & \underline{319} & \underline{142} \\\hline \text { Cash and cash equivalents at end of year } & \underline{\$ 464} & \$ \underline{319} \\\hline\end{array}$ -What was most responsible for the negative cash flow from financing activities during 2017? What amount was paid?

The statement of cash flows has been a required financial statement since 1988, but is the reporting of cash flows a relatively new concept? Explain.

During 2018, T Company engaged in the following activities: In T's statement of cash flows, what were net cash outflows from financing activities for 2018?

Proceeds from the sale of a plant site are:

Hogan Company had the following account balances for 2018: $\begin{array} { l r r r } & \text { Dec. } 31 & \text { Jar. 1} \\\text { Accounts receivable } & \$ 44,000 & \$ 35,000 \\\text { Accounts payable } & 60,000 & 55,000 \\\text { Prepaid insurarice } & 15,000 & 10,000\end{array}$ Hogan reported net income of $300,000 for 2018. Assuming no other changes in current account balances, what is the amount of net cash provided by operating activities for 2018 reported in the statement of cash flows?

The primary objective of the statement of cash flows is to provide information about a company's:

When preparing the statement of cash flows using the indirect method for determining net cash flows from operating activities, depreciation is added to net income because:

Listed below are the reporting classifications for a statement of cash flows using the direct method for reporting operating cash flows. Match the reporting classifications with the transactions described below. -Investing cash inflow

Listed below are the reporting classifications for a statement of cash flows using the direct method for reporting operating cash flows. Indicate the reporting classification that would apply to each of the five transactions described below by placing the number of the reporting classification in the space provided by each transaction. $\begin{array} { | l | l | l | } \hline \text { CLASSIFICATION } & \text { TRANSACTIONS } & \text { NUMIBER } \\\hline \text { 1. Investing cash outflow } & \begin{array} { l } \text { Acquisition of equipment by issuing } \\\text { ponds payable. }\end{array} & -\\\hline \text { 2.Noncash financing and } & \text { Repayment of long-term debt by issuing } & \\\text { investing activity } & \text { preferred stock. } & -\\\hline \text { 3. Financing cash outflow } & \text { Interest received on trading securities. } & -\\\hline \text { 4. Investing cash inflow } & \text { Cash sale of a patent at book value. } & -\\\hline & \text { Loan of cash to a supplier in exchange } & \\\text { 5. Operating cash inflow } & \text { for a six-month note receivable. } & -\\\hline\end{array}$