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Exam 13: Statement of Cash Flows

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Question 111

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You are the accountant for a small manufacturing firm. Your company is privately held, so there is no current requirement to issue financial statements using IFRS. You were hired four years ago, and at that time you instituted a cash budgeting system. Presently, you present a schedule of predicted cash sources and cash needs at the end of each week for the following week. Ken Harmon, the company's president, has asked whether a statement of cash flows would also be useful. Required: Prepare a short memorandum to the president indicating whether you believe such an addition to the financial statements to be useful. Include in your memo the benefits that might be expected from a statement of cash flows and whether those are different from the benefits of a cash sources and cash needs listing.

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Question 112

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Under the direct method, the formula for computing cash collections from customers is sales revenues plus the increase in accounts receivable or minus the decrease in accounts receivable.

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B) False

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Question 113

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The statement of cash flows will not provide insight into

Dutton Company prepared the tabulation below at December 31, 2014. Instructions Show how each item should be reported in the statement of cash flows. Use parentheses for deductions.

A company had net income of ¥2,400,000. Depreciation expense is ¥260,000. During the year, Accounts Receivable and Inventory increased ¥150,000 and ¥400,000, respectively. Prepaid Expenses and Accounts Payable decreased ¥20,000 and ¥40,000, respectively. There was also a loss on the sale of equipment of ¥30,000. How much cash was provided by operating activities?

Identify several alternatives for presenting significant non-cash activities in financial statements. (b) Give three examples of significant non-cash transactions.

Daimler Enterprises reported cash flow from operations of $292,000. The company made capital expenditures of $112,000 and paid dividends of $34,000. Instructions Compute free cash flow.

The acquisition of land by issuing ordinary shares is

The sale of land for cash would be classified as a cash inflow from an investing activity.

Selected transactions for the Eldon Company are listed below. 1. Collected accounts receivable. 2. Declared and paid dividends on ordinary shares. 3. Sold long-term investments for cash. 4. Issued ordinary shares for equipment. 5. Repaid five year note payable. 6. Paid employee wages. 7. Converted bonds payable to ordinary shares. 8. Acquired long-term investment with cash. 9. Sold buildings and equipment for cash. 10. Sold merchandise to customers. Instructions Classify each transaction as either (a) an operating activity, (b) an investing activity, (c) a financing activity, or (d) a noncash investing and financing activity.

Which of the following adjustments to convert net income to net cash provided by operating activities is correct?

During the year, Salaries and Wages Payable decreased by ¥60,000. If Salaries and Wages Expense amounted to ¥1,900,000 for the year, the cash paid to employees (including deductions from gross pay) is

The statement of cash flows will not report the

Which of the following would not be needed to determine net cash provided by operating activities?

In addition to the three basic financial statements, which of the following is also a required financial statement?

In Gentry Company, land decreased $180,000 because of a cash sale for $180,000, the equipment account increased $40,000 as a result of a cash purchase, and Bonds Payable increased $130,000 from issuance for cash at face value. The net cash provided by investing activities is

The financial statements of Meenan Company appear below: The following additional data were provided: 1. Dividends declared and paid were €34,000. 2. During the year, equipment was sold for €15,000 cash. This equipment cost €28,000 originally and had a book value of €15,000 at the time of sale. 3. All depreciation expense is in the operating expenses. 4. All sales and purchases are on account. 5. Accounts payable pertain to merchandise suppliers. 6. All operating expenses except for depreciation were paid in cash. Instructions Prepare a statement of cash flows for Meenan Company using the direct method.