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Exam 8: Reporting and Analyzing Cash Flows

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Question 51

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The indirect method for the preparation of the operating activities section of the statement of cash flows

A) Separately lists each major item of operating cash receipts
B) Separately lists each major item of operating cash payments
C) Reports profit and then adjusts it for items necessary to determine net cash provided or used by operating activities
D) Separately lists each major item of operating cash receipts and payments
E) All of these

F) A) and B)
G) None of the above

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Question 52

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The sale of equipment increases investing cash flows.

A) True
B) False

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Question 53

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The usual statement of cash flow activity category for the receipt of cash dividends from share investments is

The increase or decrease in cash equals the current period's cash balance minus the prior period's cash balance.

Under IFRS,the payment of cash dividends to shareholders can be classified as either a financing activity or operating activity.

A noncash purchase of land is reported in the investing section of the statement of cash flows as a separate line item.

Use the indirect method to calculate the net cash provided (or used) by operating activities based on the following information: $\begin{array}{|l|r|}\hline \text { Profit } & \$ 60,000 \\\hline \text { Depreciation expense } & 7,200 \\\hline \text { Gain on sale of land } & 14,000 \\\hline \text { Decrease in inventory } & 3,500 \\\hline \text { Increase in accounts payable } & 5,500 \\\hline \text { Cash from land sale } & 9,200 \\\hline\end{array}$

Describe the steps involved in the preparation of the statement of cash flows.

The purchase of non-current assets by issuing a note payable is reported on the statement of cash flows in the

For each of the following independent cases,use the information provided to calculate the missing cash inflow/outflow:

Examine each of the following transactions (1) through (5) .Determine where each should be reported on a statement of cash flows.The possible locations are identified by items (a) through (e) .(1) Equity securities of another company were accepted in exchange for a copyright.(2) Received cash dividends.(3) Proceeds from the sale (discounting) of a loan made by the business.(4) Purchased treasury shares.(5) Received a settlement on a lawsuit.A - Operating activities.B - Investing activities.C - Financing activities.D - Schedule of noncash financing and investing activities.E - Not reported on the statement of cash flows.

Conversion of preferred shares to common shares is disclosed in the financing section of the statement of cash flows.

Calculate (1)the cost of goods purchased and (2)the cash paid for merchandise based on the following information provided about the operations of Green Company.

Identify the impact of non-current asset transactions on cash flows.

If accounts receivable have a positive effect on cash flow that is because accounts receivable increased during the year.

Airqon Co.'s income statement showed the following for the year ended December 31,2021: profit,$89,000; depreciation expense,$42,000; and gain on sale of plant assets,$6,000.An examination of the company's current assets and current liabilities showed that the following changes occurred because of operating activities: accounts receivable decreased $5,500; merchandise inventory increased $7,200; prepaid expenses increased $55,600; accounts payable decreased $3,300.Using the indirect method,calculate the net cash provided (or used)by operating activities.

Acquisitions of non-current assets

Under the indirect method,decreases in non-cash current assets are added to profit.

The statement of cash flows is

Transactions with the owners of a business or transactions with its creditors to borrow money or to repay the principal amounts of loans are called