Chapter 14. Statement of Cash Flows

Kato Company had a $15,000 beginning balance in equipment and have an $18,000 ending balance in equipment. Kato purchased equipment costing $4,000 during the accounting period. There were no gains or losses from the sale of equipment shown on the income statement. Based on this information alone. the amount of cash inflow and selling equipment was: (Assume all purchases were made with cash.)

$1,000

Kato company had a $10,000 beginning balance in investment securities and a $14,000 ending balance in investment securities. Kato's sold investment securities costing $1,000 during the accounting period. Assuming the income statement shows a $200 gain on the sale of securities, the cash inflow from the sale of marketable securities was

$1,200

Kato Company had a $80,000 beginning balance in a land and a $60,000 ending balance in land. Kato purchased land costing $10,000 during the accounting period. No gain or loss on the sale of land was shown on the income statement. Based on this information alone, the amount of cash inflow from the sale of land was

$30,000

Kato Company had a $50,000 retained earnings and a $56,000 ending balance in retained earnings. During the year, Kato earned $10,000 of net income. Based on this information alone, Kato's statement of cash flows would include a

$4,000 cash outflow from financing activities.

Kato company had a $50,000 beginning balance in retained earnings and a $56,000 ending balance in retained earnings. During the year, Kato earned $10,000 of net income. based on this information alone, Kato's statement of cash flows would include a

$4,000 cash outflow from financing activities.

Kato company had a $10,000 beginning balance in investment securities and a $14,000 ending balance in investment securities. Kato's sold investment securities costing $1,000 during the accounting period. Based on this information alone, the amount of cash outflow from the purchase of investment securities was: (Assume all purchases were made with cash.)

$5,000

Stella Company had a $7,300 beginning balance in unearned revenue and a $6,000 ending balance in unearned revenue. Also, Stella reported net income of $62,000. Based on this information alone, the amount of cash inflow from operating activities was

$60,700.

Bruno Company had a $27,000 beginning balance in treasury stock and a $22,000 ending balance in treasury stock. During the year, Bruno purchased treasury stock costing $6,000. Based on this information alone, Bruno's statement of cash flows would include a(n): (Select all that apply.)

-$11,000 cash inflow from financing activities. -$6,000 cash outflow from financing activities.

Which of the following items are included in the financing activities section of the statement of cash flows? (Select all that apply.)

-Cash flows associated with borrowing money -Cash flows associated with transactions involving the issuance of common stock.

Which of the following items are included in the operating activities section of the statement of cash flows? (Select all that apply.)

-Cash outflows for expenses -Cash inflows from dividends

Which of the following statements is true? (Select all that apply.)

-Financing activities is one of three categories of information presented in a statement of cash flows. -Operating activities is one of three categories of information presented in a statement of cash flows.

Which of the following signal cash inflows from financing activities? (Select all that apply.)

-Increases in common stock -Increases in short-term notes payable

Which of the following items would appear in the schedule of non-cash financing and investing activities. (Select all that apply.)

-Trading a truck for a computer -Paying for a building with common stock

To determine the cash flow from operating activities using the indirect method,: (Select all that apply)

-add increases in short-term liabilities from net income. -subtract decreases in short-term liabilities from net income

Kato Company had a $200,000 beginning balance in a mortgage payable and a $400,000 ending balance in a mortgage payable. An examination of Kato's accounting records revealed that the company issued a mortgage note to acquire land. Based on this information alone, Kato's statement of cash flows would show a: (Select all that apply.)

-noncash financing activity -noncash investing activity

To determine the cash flow from operating activities, (Select all that apply)

-subtract increases in short-term assets from net income. -add decreases in short-term assets from net income.

Which of the following formulas is correct?

Beginning marketable securities balance + securities purchases - securities sales = Ending marketable securities balance securities

Which of the following formulas is correct?

Beginning retained earnings + Increase due to net income - decrease due to dividend payments = Ending retained earnings

True or false: The Financial Accounting Standards Board (FASB) recommends the indirect method for preparing the statement of cash flows.

False

Cash flow rules (indirect method)

Start with net income Rule 1. Add decreases and subtract increases for noncash current assets Rule 2. Add increases and subtract decreases for noncash current liabilities Rule 3. Add non cash expenses (Depreciation) Rule 4. Add losses and subtract gains =Net cashflow

The schedule of noncash investing and financing activities is normally shown

at the bottom of the statement of cash flows.

Kato Company had a $250,000 beginning balance in bonds payable and a $200,000 ending balance in bonds payable. During the year, Kato issued $75,000 of bonds during the accounting period. Based on this information alone. Kato's statement of cash flows would include a $125,000

cash outflow from financing activities.

A(n) ___ in the balance of a long-term asset account suggests that a cash inflow from ___ occurred.

decrease; investing

To determine the cash flow from operating activities using the indirect method, add ___ (decreases/increases) in short-term liabilities to and ___ subtract ___ (decreases/increases) in short-term liabilities from the amount of net income.

increases, decreases

The ___ method of statement of cash flow preparation makes adjustment to net income to determine the net cash flow from operating activities.

indirect

Kato Company had a $140,000 beginning balance in common stock and a $160,000 ending balance. Based on this information alone, Kato's statement of cash flow would include a $20,000

inflow from financing activities.

A(n) increase in the balance of a long-term asset account suggests that a cash outflow from ___ activities occurred.

investing

Cash flows related to acquiring or disposing of long-term assets are reported in the ___ activities section of the statement of cash flows

investing

To determine cash flow from operating activities under the indirect method, ___ (gains/losses) are added to net income and ___ (gains/losses) are subtracted from net income.

losses, gains

The beginning interest receivable balance ___ (plus/minus) the amount of accrued interest revenue ___ (plus/minus) cash collections from interest equals the ending interest receivable balance.

plus, minus

Significant noncash investing and financing events are shown in a ___ schedule that is called the Schedule of Noncash Investing and Financing Activities.

separate