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Cashew, Inc. generated a positive cash flow from operating activities of $15,000 and a negative cash flow from investing activities of $6,000 and a negative cash flow financing activities of $2,000. What was the change in cash and cash equivalents on its statement of cash flows?

$7,000 increase

Arlington Inc.'s income statement showed Net Income of $57,600 and Depreciation Expense of $9,200 Accounts Receivable increased $3,750, Inventory increased $3,200, Supplies decreased $500, Accounts Payable increased $2,700 and Accrued Liabilities decreased $1,900. Arlington's net cash flow provided by operations totaled $_____.

61150

list the steps in preparing a statement of cash flows in the correct order from top to bottom

Determine the change in each balance sheet account. Identify the cash flow category/categories to which each account relates Create schedules that summarize the operating, investing, and financing cash flows

changes in cash are classified as either operating activities, direct activities or indirect activities

False

the issuance of common stock for cash will be reported on the statement of cash flows as a cash ___________ activities.

Inflow under financing

why is the accrual-based income statement superior to a cash-based income statements in measuring profitability?

It reports the expenses incurred in generating the revenues regardless of when the cash was paid. It better reflects the operating activities of the business It reports the revenues generated regardless of when the cash was collected

for any company to survive in the long run, it must generate positive cash flows from ____________ activities on a regular basis

Operating

match the balance sheet with section of the statement of cash flows classification to which it relates Current liabilities Noncurrent liabilities Noncurrent assets

Operating activities Financing activities Investing activities

The classifications used to categorize cash inflows and outflows on the statement of cash flows includes _____ activities, _____ activities, and _____ activities.

Operating, Investing, Financing

which of the following items would not be classified as a financing activity?

Repayments of accounts payable

How is the change in retained earnings accounted for in the statement of cash flows?

The change is accounted for by the addition of net income in operating activities and the subtraction of dividends in financing activities.

braden and sons inc paid cash to purchase equipment costing $342,000 this year.

The purchases and the sales of equipment must be shown separately as a decrease to cash for $342,000 (purchase) and an increase of $70,000 (sale).

what are some reasons for adverse differences between net income and cash flows from operating activities that should cause concern?

Uncontrolled growth of accounts receivable Overstocking inventory

a decrease in prepaid insurance is added to net income because ______

a decrease in prepaid insurance causes an increase in insurance expense and a decrease in net income, but it does not involve cash

Depreciation Expense is omitted from the statement of cash flows when using the direct method because depreciation expense is ___________

a non-cash expense

Depreciation Expense is _____________ when preparing the indirect method of the statement of cash flows

added back to net income because the expense does not involve the payment of cash

when operating cash flows are calculated using the indirect method, if accrued liabilities increased, then the change is ________ during the period

added to net income because less cash was paid than expensed

when operating cash flows are calculated using the indirect method, if accrued liabilities increased, then the change is ___________ ...........

added to net income because less cash was paid than expensed

when operating cash flows are calculated using the indirect method, if accounts receivable balance decreased, then the change is _________ during the period

added to net income because more cash was collected than revenues generated

which of the following statements best describes why changes in current liabilities are classified as operating activities? changes in current liabilities ____________.

are directly related o cash inflows and outflows arising from revenues and expenses involved in daily operations of the business

free cash flow is the amount of cash available to use to _________

build up the company's cash balance repay existing financing expand the business through additional investing activities

ABC Company issued 30,000 shares of common stock in January, in august, the company repurchased 5,000 shares for the treasury

cannot: financing

Short-term, highly liquid investments that are purchased within three months of maturity can be considered _____ equivalents.

cash

credits to the notes payable T-account are reported as ___________

cash inflows under financing activities

credits to the notes payable t-account are reported as ________

cash inflows under financing activities

the complete list of items needed to prepare a statement of cash flows includes ____________

comparative balance sheets, complete income statement, and additional data concerning accounts in investing and financing activities

a decrease in accounts payable will result in a(n) _________ to net cash flow from operating activities.

decrease

when using the indirect method in preparing the statement of cash flows, if cash collected from customers is greater than the revenues generated, then the _______ net income.

decrease in accounts receivable will be added to

If the direction of change in Accounts Receivable is a __________ (increase/decrease) from the prior period, the amount of that change is added to net income in the _________ activities section of the statement of cash flows.

decrease; operating

when operating cash flows are calculated using the indirect method, which of the following is the correct adjustment to convert net income into net cash from operating activities?

deduct from net income increases in current assets

when operating cash flow are calculated using the indirect method, if accrued liabilities decreased, then the change is _________ during the period

deducted from net income because more cash was paid then expensed

the company cash outflows for operating expenses can be taken directly from the income statement because the expenses reflect the actual cash paid during the period

false

repayment of principal to creditors are classified as _______________ activities

financing

a(n) ________in accrued liabilities, such as interest payable, will be added to net income when determining net cash flow from operating activities

increase

using the indirect method, when the direction of change in inventory is a(n) ____________, the amount of that change is subtracted from net income to include inventory transactions that decrease cash, but do not impact net income

increase

using the indirect method, when the direction of change in inventory is a(n) _____________, the amount of that changes is subtracted from net income to include ................

increase

During the past year, Arnold Inc.'s comparative balance sheet reported an increase in overall stockholers' equity of $43,500, a decrease in total liabilities of $17,200, and an increase in assets other than cash of $12,000. Consequently, Arnold, Inc. reported a(n) _____ (increase/decrease) in cash of $______.

increase $14,300

a decrease in income tax payable will ________ cash outflows because cash paid is _________ than income tax expense .

increase more

a decrease in interest payable will ________ cash outflows because interest paid is ______ than the interest expense on the income statement

increase more

a decrease in interest payable will ________ cash outflows because interest paid is _________ than the interest expense on the income statement.

increase more

when preparing the operating activities section of the statements of cash flows using the indirect method, adding a decrease in accounts receivable to net income allows the inclusion of transactions that ________.

increased cash, but did no affect net income

The two alternative methods that may be used in preparing the operating section of the statement of cash flows are the ___ and ___ methods.

indirect direct

place in order the developmental stages of typical life cycle of a business starting with the first stage on top

introductory phase growth phase maturity phase decline phase

if the __________ account increased during the year, the company purchased more than it sold.

inventory

changes in property, plant and equipment relate to the _____________ activities on the statement of cash flows

investing

the sale of its intangible asset, trademark, is considered a(n) __________

investing activity because the purchase and sale of assets that benefit the company for more than one year are classified as such.

a negative cash flow under financing activities on the statement of cash flows may indicate a company_________

is contracting has declared a dividend has repaid loan principal

when using the direct method for determining cash flows from operation, depreciation expense ______ from the statement of cash flows

is omitted

a decrease in accrued liabilities indicates that __________ was expensed than paid ..........

less subtracted form

a decrease in inventory indicates that _______ inventory has been sold than purchased and thus the decrease will be __________ net income on the statement of cash ...........

more : added to

a decrease in inventory indicates that _______ inventory has been sold than purchased and thus the decrease will be ____________ ...............

more : added to

an increase in accounts payable indicates that ___________ was purchased than paid

more: added to

an increase in accrued liabilities indicates that __________ was expensed than paid ........

more: added to

the starting point for preparing the operating activities section using the indirect method is _____________

net income

depreciation expense is added to net income when preparing the cash flow from operating activities section because depreciation represents a(n) ___________ reduction to net income

noncash

U.S. GAAP classifies the payment of interest as a(n) ____________ activity on the statement of cash flows.

operating

when accrued liabilities increase, it means that the company _________ during the year

paid less cash than it recorded as operating expenses

when cash is paid within a year before the expense is recognized, the payment is recorded as a(n) _________ expense and is classified as a current __________ and affects the __________ section of the statement of cash flow

prepaid asset operating

to convert operating expense to cash paid for operating expenses using the direct method, changes in _______ need to be determined

prepaid expenses accrued liabilities

which of the following items would not be classified as a financing activity?

repayments of account payable

material noncash investing and financing transactions are ____________

reported in a supplementary schedule to the statement of cash flows

depreciation expense is added to net income when preparing the operating activity section of the statement of cash flows using the indirect method

true

net cash flows provided by (used in) operating activities is always the same under the direct and indirect methods

true