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Exam 12: Statement of Cash Flows

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Question 31

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The statement of cash flows would not disclose the effects of:

A) a 2-for-1 stock split.
B) a sale of equipment.
C) a purchase and retirement of treasury stock.
D) cash dividends declared and paiD.Stock splits do not involve cash, and would not be reported on the statement of cash flows.

E) None of the above
F) B) and D)

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Question 32

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Sterling Corporation has beginning and ending accounts payable balances of $400 and $800, respectively. Inventory had beginning and ending balances of $700 and $500, respectively. If cost of goods sold was $2,800, how much cash was spent to obtain inventory:

A) $2,000.
B) $2,400.
C) $2,600.
D) None of these.

E) A) and B)
F) A) and C)

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Question 33

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What effect does the following journal entry have on the amount of cash generated by operating activities?

Greenleaf Corporation's credit sales for 2013 were $600,000, and the balance in its accounts receivable increased by $16,000 during the year. In 2013, Greenleaf collected $616,000 in cash from its customers.

Cash receipts from interest on a note receivable would be classified on the statement of cash flows in the:

The Garcia Corporation provided the following partial list of accounts, balances and activities for 2013: Garcia's income statement reported a $16,000 gain on sale of land that occurred when land that had cost $32,000 was sold for $48,000. The company also recorded a $20,000 loss on the sale of marketable securities. No additional marketable securities were purchased during the year. The company also sold equipment originally costing $12,000 with accumulated depreciation of $8,000 for $7,200. Purchases of additional land and equipment were cash transactions. Required: Prepare the investing activities section of the statement of cash flows.

On September 1, 2013, the Ling Company purchased equipment making a down payment of $5,500 cash and signing a one-year note payable on the $12,500 balance. The note carried an interest rate of 6%, and all interest was to be paid on the maturity date. Which of the following correctly shows the combined effect of the purchase as well as the accrual of interest on December 31, 2013?

What is the major advantage of using the indirect method of preparing the statement of cash flows?

George Co. sold equipment with a book value of $30,000 for $27,000 cash.

On December 31, 2013, George Corporation recorded the expiration of $6,000 of insurance that was previously recorded as an asset. Show the effects of this transaction on George's income statement and statement of cash flows.

Interest expense is shown as:

When using the indirect method to complete the cash flows from operating activities section of the statement of cash flows, what is the proper disposition of a loss on disposal of equipment?

Which of the following would not be a cash flow from financing activities?

The direct method of preparing the statement of cash flows is preferred by the Financial Accounting Standards Board.

On January 1, 2013, the balance of Jackson Corporation's Accounts Receivable was $20,000. Sales on account for 2013 amounted to $160,000 and the ending balance of Accounts Receivable was $32,000. What is the amount of cash collected from customers?

The Bell Corporation had a balance in its Equipment account on January 1, 2013 of $325,000. During the year, equipment originally costing $85,000 and having Accumulated Depreciation of $20,000 was sold for $67,000. The ending balance of the Equipment Account was $275,000. How much did the company spend to purchase additional equipment during 2013?

The following beginning and ending balances were drawn from the records of Brown Co. If Brown Co. sold equipment that had an original cost of $350 and accumulated depreciation of $150 for $125, how much did Brown pay for new equipment?

Which of the following statements best explains the correct handling of depreciation on the statement of cash flows when using the indirect method?

Can a company have a negative cash flow from operating activities for the year but still have a net income on the income statement? Explain.

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