Statement of Cash Flows - Exam 2

The following selected data are from a recent statement of cash flows: Net cash flow from operating activities $35,000 Net cash flow used for investing activities (20,000) Net cash flow from financing activities 60,000 Beginning cash balance 45,000 What was the ending cash balance?

$120,000

If a gain of $7,000 results from selling (for cash) office equipment having a book value of $55,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is

$62,000

Which of the following would be shown on a statement of cash flows under the financing activities section?

The issuance of bonds

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

cash inflow in the investing activities section

Cash received through the sale of long-term investments would be reported in the statement of cash flows as a

cash inflow in the investing activities section.

If $20,000 in cash dividends was declared during the year and there was no change in the dividends payable account, the presentation in the financing activities section of the statement of cash flows would be

cash paid for dividends, $(20,000)

direct method of reporting cash flows from operating activities, cash payments for merchandise total

cost of goods sold, + increase in inventory or - a decrease in inventory, and + a decrease in accounts payable or - an increase in accounts payable.

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

debit to operating activities—net income

When completing the spreadsheet to prepare the statement of cash flows, an increase in retained earnings due to net income would require an entry in the transactions columns involving a

debit to operating activities—net income.

net cash flow from operating activities - indirect method formula

increase in a current asset + decrease in current liabilities - net income. Opposite is added.

A company that has positive free cash flow

is able to easily retire debt.

If the free cash flow changed from $50,000 to $40,000, the change

is indicative of an unfavorable trend.

Step 1 of preparing a spreadsheet for the statement of cash flows is to a. analyze the change during the year in each noncash account and classify the change. b. list the title of each balance sheet account in the accounts column. c. add the column totals. d. enter the balance of each balance sheet account.

list the title of each balance sheet account in the accounts column

Which of the following is used in calculating cash received from customers using the direct method? a. An increase in accounts payable b. A decrease in inventory c. An increase in inventory d. A decrease in accounts receivable

A decrease in accounts receivable

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

A decrease in inventory

Which of the following is not included in the financing activities section of the statement of cash flows?

A stock split

Which of the following should be subtracted from net income in calculating net cash flow from operating activities using the indirect method?

An increase in inventory

The ending figure on the statement of cash flows should match what figure on the balance sheet?

Cash balance

Which of the following cash flow elements should be presented first on the statement of cash flows? a. Cash flows from operating activities b. Cash flows from financing activities c. Beginning cash balance d. Ending cash balance

Cash flows from operating activities

Dividends declared during the year were $54,000. The dividends payable account decreased by $8,000. Which of the following will appear in the financing activities section of the statement of cash flows?

Cash paid for dividends, $(62,000)

Which of the following is the starting point in calculating net cash flow from operating activities using the direct method?

Cash received from customers

Which of the following is not included in the investing activities section of the statement of cash flows? a. Depreciation on equipment b. The sale of a building for cash c. The purchase of equipment for cash d. The purchase of land for cash

Depreciation on equipment

Which of the following would indicate a cash outflow to appear in the financing activities section of the statement of cash flows?

Increase in treasury stock account

free cash flow formula

Net operating profit - investment