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Exam 12: Statement of Cash Flows

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Question 41

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Investing activities on the statement of cash flows always involve long-term assets, including investments.

A) True
B) False

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Question 42

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When the indirect method is used to prepare the statement of cash flows, what is the starting point of the operating activities section?

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Net income...

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Question 43

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

Assuming the use of the indirect method to prepare the statement of cash flows, indicate whether each of the following items would be added to net income, subtracted from net income, or not included in the operating activities section of the statement of cash flows. Use the letters "A" for added; "S" for subtracted or "N" for not included in operating activities section.

Taliaferro Corporation had the following comparative balance sheet information for 2012 and 2013: The company reported net income for 2013 of $80,000. No property, plant & equipment was disposed of during the year. Taliaferro paid $32,000 in cash dividends during 2013. Taliaferro uses the indirect method to prepare the statement of cash flows. Required: Prepare Taliaferro's Statement of Cash Flows for 2013.

Baltimore Company pays cash for all inventory purchases. The company had a beginning inventory of $8,500 and an ending inventory of $6,900. Their cost of goods sold amounted to $55,000. Based on this information, the amount of cash paid for inventory purchases was:

Net income for the period was $40,000. The net cash flows from operating activities would be:

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

In preparing the statement of cash flows by the indirect method, noncash revenues and gains are added to net income.

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

The amount of increases in accounts receivable is added to credit sales to calculate the amount of cash inflow from customers when using the direct method to prepare the statement of cash flows.

Which of the following items would be used to compute "Net Cash Flow from Investing Activities" on a Statement of Cash Flows? 1) issue common stock 2) payment on principal of note payable 3) depreciation expense 4) sale of equipment for cash

Which of the following would not be presented in the financing section of the statement of cash flows?

Which of the following transactions is a use of cash?

Canton Company sold land that cost $340,000 for $370,000 cash. Indicate whether each of the following statements is true or false regarding Canton's statement of cash flows (SCF). _____ a) If Case uses the direct method, they would show a $30,000 cash inflow in the operating section of the SCF. _____ b) Case would show a $370,000 cash inflow in the investing section of the SCF. _____ c) Case would show a $340,000 cash inflow in the financing section of the SCF. _____ d) Case would disclose the event as a noncash investing and financing activity. _____ e) If Case 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.

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

On September 10, 2013, George Corporation received a check for $694.00 for dividends on Tandy Corporation stock that George holds as an investment. Show the effects of this transaction on George's income statement and statement of cash flows.

The amount of cash inflow from financing activities on the 12/31/2013 statement of cash flows would be:

The amount of interest expense and cash outflow shown on the 12/31/2013 financial statements would be:

On January 1, 2013, George Co. paid $20,000 to the Federal Bank for accrued interest expense that had been accrued in an adjusting entry at the end of 2013.