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Exam 15: The Statement of Cash Flows

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Question 51

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If the indirect method is used to prepare a statement of cash flows, which of the following would be deducted from net income to arrive at net cash flows from operating activities?

A) Increase in accrued liabilities
B) Increase in income taxes payable
C) Increase in accounts receivable
D) Decrease in prepaid expenses

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Question 52

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Free cash flow is measured in terms of a percentage.

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Question 53

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Use this information to answer the following question. Northbrook Corporation is preparing a statement of cash flows. The following transactions occurred during the year: 1) Sold machinery for $9,000 cash. 2) Purchased a building for $80,000 cash. 3) Issued $70,000 worth of stock to acquire an airplane. 4) Converted long-term bonds by issuing $100,000 worth of stock. 5) Declared and paid a $10,000 cash dividend. Transaction 4 would be found on the statement of cash flows in the

A cash flow yield of 2.5 times is considered better than one of 2.0 times.

The activity from the Long-Term Investments account for Fisk Corporation appears below. In addition, the income statement shows a loss on the sale of investments of $32,000. Based on the information given, compute the amounts to be shown and indicate how they would appear on the statement of cash flows. Assume that the indirect method is being used and that the investments were purchased for cash.

The statement of cash flows discloses the effect on cash of the purchase and sale of both short- and long-term investments.

Interest expense is one item added to net income as per the income statement to arrive at net cash flows from operating activities.

Assume the indirect method is used to compute net cash flows from operating activities. For this item extracted from the financial statements-Loss on Sale of Investment-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

If the indirect method is used to prepare a statement of cash flows, which of the following would be added to net income to arrive at net cash flows from operating activities?

The primary purpose of the statement of cash flows is to provide information about a company's cash receipts and cash payments during an accounting period.

Use this information to answer the following question. Northbrook Corporation is preparing a statement of cash flows. The following transactions occurred during the year: 1) Sold machinery for $9,000 cash. 2) Purchased a building for $80,000 cash. 3) Issued $70,000 worth of stock to acquire an airplane. 4) Converted long-term bonds by issuing $100,000 worth of stock. 5) Declared and paid a $10,000 cash dividend. Transaction 3 would be found on the statement of cash flows in the

Dividends paid are reflected in the financing activities section of the statement of cash flows.

How are cash equivalents treated on a statement of cash flows?

The primary purpose of the statement of cash flows is to provide information

Use this information to answer the following question. Northbrook Corporation is preparing a statement of cash flows. The following transactions occurred during the year: 1) Sold machinery for $9,000 cash. 2) Purchased a building for $80,000 cash. 3) Issued $70,000 worth of stock to acquire an airplane. 4) Converted long-term bonds by issuing $100,000 worth of stock. 5) Declared and paid a $10,000 cash dividend. Transaction 1 would be found on the statement of cash flows in the

For purposes of preparing the statement of cash flows, cash is defined as including both cash and cash equivalents.

Royer Corporation engaged in this transaction: Purchased 60-day commercial paper. Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash flows.

During 2009, Heckart Corporation had sales of $250,000, net income of $25,000, average total assets of $350,000, dividend payments of $17,500, net cash flows from operating activities of $45,000, purchases of plant assets of $37,500, and sales of plant assets of $45,000. Free cash flow equals

Royer Corporation engaged in this transaction: Sold long-term investment. Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash flows.

Royer Corporation engaged in this transaction: Converted loans payable to stock. Indicate which section, if any, the above transaction would appear in, or relate to, on a statement of cash flows.