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Exam 24: The Statement of Cash Flows

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Question 1

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For each of the following operating activities, select whether it is a source of cash, a use of cash, neither under the indirect method. -loss on early redemption of bonds

A) source
B) use
C) neither

D) All of the above
E) B) and C)

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Question 2

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The purpose of the--------- is to report the cash balance at the beginning and end of the fiscal period and to show the sources and uses of cash during the period.

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A list of sources and uses of cash are given below. Indicate on the line provided whether each is an:

For each of the following operating activities, select whether it is a source of cash, a use of cash, neither under the indirect method. -depreciation expense

Use the following information for the questions. The Dolmen Company Income Statement For the Year Ended June 30, 2019 The Dolmen Company Comparative Balance Sheet June 30, 2019 Liabilities and Stockholders' Equity Additional information: Equipment costing $100,000 was sold for $70,000. Accumulated depreciation on this equipment was $20,000. Dividends of $38,000 were declared and paid in 2019. Bonds were issued at face value of $300,000. Common stock of $55,000 was issued to acquire land. Investments (stock in IBM) were purchased for $275,000. -Using the information provided, prepare the cash flows from operating activities for The Dolmen Company.

When the net income is adjusted to arrive at the net cash provided by operating activities, the amount of the bond premium amortized is added to the net income.

When using the indirect method of preparing the statement of cash flows, the payment of interest is considered to be:

Chattel Company sold equipment that originally cost $46,000 and accumulated depreciation in the amount of $38,200 for $8,000 cash. -What amount is reported in the Cash Flows from Operating Activities section of the Statement of Cash Flows for the sale of this equipment?

A corporation received $89,000 in cash from the sale of common stock and used the proceeds to pay $72,000 in bonds payable. As a result, the statement of cash flows would report:

For each of the following operating activities, indicate whether it is a under the indirect method:

A corporation received $45,000 in cash from the sale of a building and paid $96,000 in cash for the purchase of new machinery. As a result, the statement of cash flows would report:

The Financial Accounting Standards Board prefers the indirect method of preparing the statement of cash flows.

Cannon Manufacturing Co. sold equipment that cost $18,000 for $6,000. A gain on sale of $1,000 was recorded. How is the Cash Flows from Operating Activities affected?

A list of sources and uses of cash are given below. Indicate on the line provided whether each is an (O) operating, (I) investing, (F) financing, or a significant (N) noncash financing and investing activity. -issued bonds payable

When using the Direct Method of preparing the Statement of Cash Flows, interest expense is treated as an outflow of cash in the----------section.

Cash and cash equivalents, as used on the statement of cash flows, consist of:

A list of sources and uses of cash are given below. Select on the line provided whether each is an operating, investing, or financing activity. -sale of merchandise

If the indirect method of preparing the statement of cash flows is used, a note disclosing the amount of interest and income taxes paid during the period must accompany the statement.

A list of sources and uses of cash are given below. Select on the line provided whether each is an operating, investing, or financing activity. -pay interest expense

The amortization of the premium on bonds payable is reported in the----------- section of the Statement of Cash Flows.