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Exam 21: Statement of Cash Flows Revisited

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Question 21

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The statement of cash flows and related disclosures would be of the least assistance in helping a potential investor assess

A) a firm's ability to generate cash.
B) a firm's ability to make good use of cash reserves to earn interest or other return.
C) a firm's ability to meet its obligations.
D) the reasons for differences between income and associated cash flows.

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Question 22

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Which of the following would appear in both the operating activities section of the direct method format and the reconciliation of earnings to net operating cash flow format?

A) Sale of cash equivalents at a gain
B) Sale of cash equivalents at cost
C) Dividends received on equity method investments
D) Collection of an account receivable previously written off

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Question 23

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Jacquin Corporation reports its income from investments under the equity method and recognized income of $15,000 from its investment in Trapper Company during the current year.Trapper declared no dividends during the current year.On Jacquin's statement of cash flows the $15,000 would

Use the following information to compute the cash flow from operating activities under (1)the U.S.approach,and (2)the U.K.approach.

Choose the combination below that best reflects the appropriate classification of cash received from investing and financing activities.

Proceeds from the sale of investments in common stock accounted for by the equity method would be classified into which of the following sections of the statement of cash flows?

At the beginning of the year,a firm leased equipment on a capital lease,capitalizing $60,000 in its lease receivable account.The contract calls for December 31 payments of $15,000.The lessor's annual reporting period ends December 31 and the contract reflects 10% interest.The lessee made the first payment as required.The direct method statement of cash flows for the lessor should reflect which of the following in the first year of the lease contract (ignore noncash disclosures) ?

Financial information for Princeton Company at December 31,2014,and for the year then ended,are presented below: Additional information: 1.Wrote off $500 accounts receivable as uncollectible. 2.Sold an operational asset for $4,000 cash (cost,$15,000,accumulated depreciation,$9,000). 3.Issued common stock for $5,000 cash. 4.Declared and paid a cash dividend of $5,000. 5.Purchased land for $20,000 cash. 6.Acquired land for $21,000,and issued common stock as payment in full. 7.Acquired operational assets,cost $16,000; issued a $16,000,three-year,interest-bearing note payable. 8.Paid a $10,000 long-term note installment by issuing common stock to the creditor. 9.Borrowed cash on a long-term note,$20,000. Required: Prepare the statement of cash flows using the indirect method.

A firm sold an investment in securities available for sale originally costing $30,000,for $28,000.At the beginning of the year,the investment had a valuation allowance of $3,000,debit.What is the correct disclosure for these events in the statement of cash flows prepared under the direct method,assuming this is the only investment in securities available for sale?

The conversion of nonparticipating preferred stock into common stock should be presented in a statement of cash flows as a(n)

In preparing a statement of cash flows,the reconciliation of net income to cash from operating activities does NOT include

A change in unearned revenue would be classified into which of the following categories for purposes of disclosure in the statement of cash flows?

Aboard Company began the current year with the following: During the current year,the following events occurred: At the end of the current year,Aboard showed a balance in gross accounts receivable (before the allowance for doubtful accounts) of $16,800. What amount would be shown as an operating cash inflow in the statement of cash flows under the indirect method?

Show the U.S.Approach and the U.K.Approach to compute the cash flow from operating activities using the following information:

Which of the following is NOT required by generally accepted accounting principles?

The records of Bramhall Company provided the following information for the year ended December 31,2014: Additional Information: 1.Sold the long-term investment at cost,for cash.The securities were classified as available-for-sale.The market value had not changed since acquisition. 2.Declared and paid a cash dividend of $28,000. 3.Purchased operational assets that cost $68,000 by giving a $48,000 long-term note payable and by paying $20,000 cash. 4.Paid a $16,000 long-term note payable by issuing common stock having a market value of $16,000. 5.Issued a stock dividend of $44,000. Required: Prepare a statement of cash flows using the direct method for Bramhall Company for the year ending December 31,2014.

Which of the following would be reported in the operating,investing,or financing sections of the statement of cash flows prepared under the indirect method?

Choose the combination that best reflects the appropriate classification of cash received from operating,investing and financing activities.

Which of the following is not an inflow of cash?

Assume cash paid to suppliers for 2014 is $420,000,that merchandise inventory increased by $20,000 during the year,and that cost of goods sold was $415,000 for the year.During 2014,accounts payable must have