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Exam 24: The Statement of Cash Flows

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Question 51

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The payment of interest is considered to be

A) an outflow of cash that results from a financing activity.
B) an outflow of cash that results from an investing activity.
C) an outflow of cash that results from an operating activity.
D) an activity that is not reported on the statement of cash flows.

E) None of the above
F) All of the above

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Question 52

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For each of the following operating activities,indicate whether it is a source of cash,a use of cash,or neither under the indirect method.

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(a)source, (b)source...

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Question 53

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Chattel Company sold for $5,000 equipment that originally cost $40,000 and had depreciation in the amount of $34,000 taken.What amount is reported in the Cash Flows from Operating Activities section of the Statement of Cash Flows?

When the net income is reconciled with the net cash provided by operating activities,depreciation expense is added to the net income.

Cinders Inc,reported net income of $50,000 and loss on sale of plant assets of $15,000.The cash received from the sale of plant assets was $45,000.Cinders also issued additional shares of stock for $25,000 and paid dividends of $4,500.Calculate the increase or decrease in cash from investing activities.

An increase in accounts payable is

Chattel Company sold for $7,000 equipment that originally cost $40,000 and had depreciation in the amount of $34,000 taken.What amount is reported in the Cash Flows from Investing Activities section of the Statement of Cash Flows?

A decrease in accounts payable from $60,000 to $50,000 will be reflected on the statement of cash flows as a:

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

Bastion Corporation paid $15,600 on its mortgage loan.The principal portion was $5,000 and the interest was $10,600.The $5,000 constitutes what on the Statement of Cash Flows?

The method used by most corporations to prepare the statement of cash flows is the

Information from Zurich Company's income statement is as follows: net income $12,300,depreciation expense $12,000;gain on sale of equipment $4,000;proceeds from the sale of land $10,000.The net cash provided by operating activities is:

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

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.

Why are depreciation expense and amortization expense added to Net Income under the indirect method?

By analyzing past cash flows,financial statement users can identify the primary sources and uses of cash.

The Natural Company's cash balance at December 31,2016,was $150,000.The following information was reported on the company statement of cash flows for 2017: The Natural Company's Statement of Cash Flows would report Cash Flows from Investing Activities totaling:

The payment of cash dividends to stockholders would be classified as a cash outflow resulting from a financing activity.

The income statement shows a loss of $5,000 on the sale of equipment.As a result,the statement of cash flows would report

Why is the Statement of Cash Flows important?