ACC 301 Ch. 21 Statement of Cash Flows

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indirect

by the ____ method, the net cash increase or decrease from operating activities is derived by starting with reported net income and working backwards to convert that amount to a cash basis

direct method

cash effect of each operating activity (i.e., income statement item) is reported directly on the statement of cash flows

operating

cash flows from _____ activities are the elements of net income, but reported on a cash basis

cash basis

cash flows from operating activities are the elements of net income, but reported on a ______

investing

cash payments to acquire Investments in securities (except cash equivalents and trading securities) is what type of activity?

investing

cash payments to acquire Property, plant, and equipment and other productive assets is what type of activity?

investing

cash payments to acquire non-trade receivables is what type of activity?

operating

cashflows from ____ activities are the elements of net income but reported on a cash basis

Investing (activity)

collection of nontrade note receivable

policy

company must establish a ____ in which short-term, highly liquid investments it classifies as cash equivalents should be disclosed in the notes to the financial statement

operating (activity)

employee salaries

gain (or loss)

equals cash received in the sale of an asset minus book value of the asset

Accounts Receivable

for sales revenue, _____ is the balance sheet account affected

subtract

if there is a decrease in current liabilities you ____ that to the net income to calculate net cash flows from operating activities

subtract

if there is an increase in current assets you ____ that to the net income to calculate net cash flows from operating activities

add

if there is an increase in current liabilities you ____ that to the net income to calculate net cash flows from operating activities

add

if there is decrease in current assets you ____ that to the net income to calculate net cash flows from operating activities

operating activities

include the events and transactions that determine day to day activities

Operating (activities)

includes Current assets (except cash) and Current liabilities (excluding dividends payable and short-term notes payable)

investing (activities)

includes non-current assets/ long-term assets

financing (activities)

includes: long-term liabilities, short-term notes payable, capital stock and treasury stock, dividends declared and dividends payable.

operating (activity)

income taxes

financing activities

inflows and outflows of cash resulting from the external financing of a business

Financing (activity)

issuance of a long-term note payable

Financing (activity)

issuance of a short-term note payable

Financing (activity)

issuance of bonds

Investing (activity)

loan to another company

operating (activity)

merchandise sale

Financing (activity)

Sale of common stock

investing activities

outflows and inflows of cash caused by the acquisition and disposition of assets. Includes cash payments to acquire - PPE - intangible assets - investment in securities (except cash equivalents and trading securities) - non-trade receivables

investing

outflows and inflows of cash from ______ activities are caused by the acquisition and disposition of assets.

Financing (activity)

payment of a cash dividend

operating (activity)

payment of semiannual interest on bonds payable

Investing (activity)

purchase of a building

operating (activity)

purchase of merchandise

Financing (activity)

purchase of treasury stock

Financing (activity)

repayment of a note payable

Financing (activity)

retirement of common stock

Investing (activity)

sale of a copyright

Investing (activity)

sale of equipment at a gain

Investing (activity)

sale of land

indirect method

starts with net income and adjusts for non-cash transactions and other cash used by or provided by normal daily activities

financing

sum of cash inflows from sale of common stock, preferred stock and the issuance of bonds and treasury stocks and other LT debts. Less cash outflows from buyback of stock, repayment of debt, and payment of cash dividends to shareholders etc. = net cash flows from _____ activities

investing

sum of cash inflows from sale of long-term assets minus cash outflows from purchase of long-term assets = net cash flow from _____ activities

indirect method

the net cash increase or decrease from operating activities is derived by starting with reported NET INCOME and working backwards to convert that amount to a CASH BASIS

true

true or false: cash flows from investing activities include investments in assets and their subsequent sale

true

true or false: for income statement accounts amounts reported in the income statement usually are not the same as the cash effects reported

false

true or false: for income statement accounts, amounts reported in the income statement usually are the same as the cash effects reported

true

true or false: for sales revenue, relating sales and the change in accounts receivable during the period helps determine the amount of cash received from customers

true

true or false: net amount of cash inflows and outflows reconciles the change in the company's beginning and ending cash balances

true

true or false: there is no differentiation between amounts held as cash and amounts held in cash equivalent investments or as restricted cash

true

true or false: there is no differentiation between cash and cash equivalent investments

neither (moves from one cash account to another "cash account")

would recording the purchase of a treasury bill be an inflow or outflow of cash?

Investing (activity)

acquisition of bonds of another corporation

investing

(cash inflows from) Sale of long-term assets minus (cash outflows from) purchase of long-term assets = net cash flow from _____ activities

outflow

Cash inflow or outflow: Financing Activity: buyback of stock

outflow

Cash inflow or outflow: Financing Activity: payment of cash dividends to shareholders

outflow

Cash inflow or outflow: Financing Activity: repayment of debt

inflow

For this financing activity, issuance of bonds and notes, is this a cash inflow or an outflow?

inflow

For this financing activity, issuance of stock, is this a cash inflow or an outflow?

outflow

For this financing activity, payment of cash dividends, is this a cash inflow or an outflow?

outflow

For this financing activity, repayment of debt, is this a cash inflow or an outflow?

outflow

For this financing activity, repurchase of stock, is this a cash inflow or an outflow?

inflow

For this investing activity, Sale of investments in securities, is this an inflow or an outflow?

inflow

For this investing activity, collections of loans, is this a cash inflow or an outflow?

outflow

For this investing activity, loans to others, is this a cash inflow or an outflow?

outflow

For this investing activity, purchase of PPE and Intangible assets, is this a cash inflow or an outflow?

outflow

For this investing activity, purchase of investments in securities, is this a cash inflow or an outflow?

inflow

For this investing activity, sale of PPE and intangible assets. is this an inflow or an outflow?

inflow

For this operating activity, Cash received from revenues, is this an inflow or an outflow?

outflow

For this operating activity, cash paid for expenses, is this a cash inflow or an outflow?

false

True or false: Mere transfers from cash-to-cash equivalents or from cash equivalents to cash should be reported on the statement of cash flows.

True

True or false: Mere transfers from cash-to-cash equivalents or from cash equivalents to cash should not be reported on the statement of cash flows.


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