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Exam 12: Statement of Cash Flows

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Question 61

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Mayes Corporation reported utilities expense of $18,200 on its income statement for Year 1. For the year, the beginning balance in Utilities Payable was $2,500 and the ending balance was $1,500. The amount of cash that Mayes paid for utilities in Year 1 was $19,200.

A) True
B) False

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Question 62

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When the direct method is used to prepare the operating activities section of the statement of cash flows, cash inflows from customers and cash outflows for depreciation are among the categories of cash flows likely to be reported.

A) True
B) False

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Question 63

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Erie Company reports the following comparative balance sheets and income statement information for the current year. All revenues are from credit sales. What was the cash received from customers during the year?

Shamoo Incorporated presents its statement of cash flows using the indirect method. The following accounts and corresponding balances were drawn from the company's year-end balance sheets: The Year 2 income statement showed net income of $50,000. Based on this information, the amount of the cash flow from operating activities shown on the Year 2 statement of cash flows is

During Year 1, El Paso Company had the following changes in account balances:The Accumulated Depreciation account had a beginning balance of $25,000 and an ending balance of $35,000. The increase was due to depreciation expense.The Long-Term Notes Payable account had a beginning balance of $40,000 and an ending balance of $15,000. The decrease was due to repayment of debt.The Equipment Account had a beginning balance of $25,000 and an ending balance of $92,500. The increase was due to the purchase of other operational assets.The Long-Term Investments Account (Marketable Securities) had a beginning balance of $18,000 and an ending balance of $12,500. The decrease was due to the sale of investments at cost.The Dividends Payable account had a beginning balance of $12,000 and an ending balance of $10,000. There were $20,000 of dividends declared during the period.The Interest Payable account had a beginning balance of $2,250 and an ending balance of $1,250. The difference was due to the payment of interest.What is the net cash flow from investing activities?

Which of the following is not a section of the statement of cash flows?

Howard Company uses the direct method to prepare its operating activities section of the statement of cash flows. Indicate how each event affects net income and the three types of activities on the statement of cash flows. In the net income column, use the letter "I" to indicate increase, the letter "D" to indicate decrease, and the letters "NA" to indicate that the income statement is not affected. In the three cash flow columns, use the letter "I" to indicate cash inflow, the letter "D" to indicate cash outflow, and the letters "NA" to indicate that the cash flow statement is not affected. Howard Company purchased land costing $25,000 by paying $8,000 cash and issuing a note payable for the remaining balance.

What effect does depreciation expense have on net income and cash flows?

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 operating activities section of 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.

In preparing the operating activities section of the statement of cash flows by the indirect method, gains are added to net income.

On August 1, Year 1, Jackson Company issued a one-year $80,000 face value interest-bearing note with a stated interest rate of 9% to Galaxy Bank. Jackson accrues interest expense on December 31, Year 1, its calendar year-end.What is the amount of interest expense and the cash outflow for interest during the year ending December 31, Year 1?

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

If cash from operating activities was $48,000, cash used for investing activities was ($88,000) and the net change in cash was $96,000, what was cash from/used for financing activities?

Phillips Company reported total credit sales of $244,200 for Year 2. Its accounts receivable totaled $39,500 and $57,700 at the beginning and end of the year, respectively. What was the cash collected from customers during Year 2?

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

On January 1, Year 1, Chisolm Company purchased equipment for $36,000 cash. On December 31, Year 1, 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.

Baird Company reported depreciation expense of $27,200 and net income of $50,400 on its Year 2 income statement. During Year 2, the company's accounts receivable balance decreased by $13,600. Based on this information alone, what was the amount of cash flow from operating activities?

Consider each of the following activities. Required:Identify whether each of the following activities will be reported in the operating activities, investing activities, or financing activities section of the statement of cash flows.

Ervin Company began the accounting period with $61,500 in accounts receivable. The ending balance in accounts receivable was $23,000. If the credit sales during the period were $148,000, what is the amount of cash received from customers?

For the year ended December 31, Year 1, Fields Company made cash payments of $50,000 for dividends, paid interest of $20,500, paid $30,000 cash to suppliers, and purchased equipment for $64,000 cash. What is the net cash used by investing activities for Year 1?