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Exam 13: Statement of Cash Flows

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Question 71

Multiple Choice

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A corporation uses the indirect method for preparing the statement of cash flows.A fixed asset has been sold for $25,000 representing a gain of $4,500.The value in the operating activities section regarding this event would be

A) $25,000
B) $(4,500)
C) $29,500
D) $4,500

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

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Question 72

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Under the direct method of reporting cash flows from operations,the primary source of cash is cash received from customers.

A) True
B) False

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Question 73

Multiple Choice

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On the statement of cash flows,a $7,500 gain on the sale of fixed assets would be

Income tax expense was $175,000 for the year.Income tax payable was $30,000 and $40,000 at the beginning and end of the year,respectively.Cash payments for income tax reported on the statement of cash flows using the direct method is

When using the spreadsheet (work sheet)method to analyzing noncash accounts,no order of analysis is required,but it is more efficient to start with Retained Earnings and proceed upward in the account listing.

Identify the section of the statement of cash flows (a-d) where each of the following items would be reported. -Decrease in inventory

There are two alternatives to reporting cash flows from operating activities in the statement of cash flows: (1)the direct method and (2)the indirect method.

In preparing the cash flows from operating activities section of the statement of cash flows by the indirect method,the net decrease in inventories from the beginning to the end of the period is added to net income for the period.

Financing activities include

Sales reported on the income statement were $690,000.The accounts receivable balance declined $39,000 over the year.Determine the amount of cash received from customers.

A company purchases equipment for $32,000 cash.This transaction should be shown on the statement of cash flows under

The statement of cash flows is an optional financial statement.

If land costing $145,000 was sold for $205,000,the $60,000 gain on the sale would be added to net income in the operating activities section of the statement of cash flows (prepared by the indirect method).

State the section(s)of the statement of cash flows prepared by the indirect method (operating activities,investing activities,financing activities,or not reported)and the amount that would be reported for each of the following transactions:

If a gain of $11,000 is realized in selling (for cash) office equipment having a book value of $55,000,the total amount reported in the cash flows from investing activities section of the statement of cash flows is

Connor Designs Company has cash flows for operating activities of $425,000.Cash flows used for investments in property,plant,and equipment totaled $65,000,of which 70% of this investment was used to replace machinery to maintain its current operations. ​ What is the free cash flow for Connor Designs?

Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows?

To determine cash payments for merchandise for the statement of cash flows using the direct method,a decrease in accounts payable is added to the cost of goods sold.Assume all accounts payable are owed to merchandise suppliers.

If $475,000 of bonds payable are sold at 101,$475,000 would be reported in the cash flows from financing activities section of the statement of cash flows.

Cash,as the term is used for the statement of cash flows,could indicate either cash or cash equivalents.