ACCT 370

Amounts on the balance sheet that do not map directly to corresponding account changes in the statement of cash flows include all the following except

acquisition of treasury stock

Zero-coupon bond settlement should be

allocated between operating and financing cash flows.

The ___ Method of translating financial statements generates a potential discrepancy between the change in the inventory amount presented in the balance sheet and the cash flow statement inventory change figure

current rate

Firms using the ___ Method of preparing cash flow statements must separately disclose the amount of interest paid

indirect

The operating section on the cash flow statement starts with net income using the

indirect method

Firms using the indirect method are required to separately disclose the amount of

interest paid

Cash flows arising from the acquisitions and the divestitures of other companies are cash flows from

investing activities

A decrease in income tax receivable

is added to net income in calculating operating cash flows using the indirect method.

An increase in income tax payable

is added to net income in calculating operating cash flows using the indirect method.

An increase in prepaid expenses

is deducted from accrual earnings to obtain operating cash flows using the indirect method.

A decrease in accrued expenses

is shown as a deduction from accrual earnings to arrive at operating cash flows using the indirect method.

An increase in accrued expenses

is shown as an addition to accrual earnings to arrive at operating cash flows using the indirect method.

Firms using the direct method of reporting operating activities

must present major classes of gross receipts and disbursements.

ASU 2016-18 requires that ______ be included in the cash amounts used to determine the change in cash to which the cash flow statement reconciles.

restricted cash

A cash flow statement prepared under the direct method

results in the same amounts for cash provided by operating, investing, and financing activities as the indirect method.

An additional section of the cash flow statement having to do with foreign operations includes

the change in the U.S. dollar equivalent of foreign currency holdings that occur when exchange rates change

An additional section on the cash flow statement having to do with foreign operations includes

the change in the U.S. dollar equivalent of foreign currency holdings that occur when exchange rates change.

At the inception of a finance lease,

there is no immediate cash flow effect.

Use of the temporal method of translating financial statements will not generate a discrepancy between the change in the inventory amount presented in the balance sheet and the cash flow statement because

• Inventory is always translated at the exchange rate in effect when it was purchased • the US dollar value of inventories is not adjusted for changes in the exchange rate

Which of the following are reasons that the overwhelming majority of public companies use the indirect method of preparing cash flow statements?

• The indirect method realize exclusively on data already available in accrual accounts • The indirect method categorizes cash flow in a way that many analyst find useful

Which of the following are reasons that the overwhelming majority of public companies use the indirect method of preparing cash flow statements

• The indirect method relies exclusively on data already available in accrual accounts • The indirect method characterizes cash blow in a way that many analyst bene useful

Categories of cash inflows and outflows of operating activities that are required to be reported under the direct method include

• interest and dividends received • cash collected from customers

Categories of cash inflows and outflows of operating Activities that are required to be reported under the direct method include

• interest paid • Interests received • income taxes paid

Categories of cash and blows in cash outflows of operating activities that are required to be reported under the direct method income

• interest received • interest paid • income taxes paid

Improper capitalization of operating cost causes

• these items to be reported and the investing activity section rather than the operating activity section • depreciation expenses in later years that do not reduce cash flow from operations

Which of the following would result in changes an asset balances unrelated to cash?

• write down of assets • impairment of assets

Candlewax company has net income of $175,000 in the current year. Cash flow from operating activities is

$168,800

Dillion company reported cost of goods sold at $325,000 for the current year. How much cash was paid to suppliers during the year?

$345,700

Makalan Company reported net sales of $500,000 for the current year. The beginning and ending balances in accounts receivable were $62,500 and $75,000, respectively. How much cash was received from customers during the year?

$487,500

Dexter corporation reported net income for the current year of $85,000. Using only this information, what is their cash flows from operating activities using the indirect method

$81,950

Solar corporation reported net income for the current year of $75,000. They reported depreciation expense of $12,575. Cash flow from operating activities is

$87,575.

Which of the following is true regarding a change in accounts payable as it relates to the indirect method of a cash flow statement

A decrease in Accounts payable must be subtracted from accrual-basis earnings to arrive at cash flows from operations.

Examples of non-cash financing in investing activities include each of the following except

Acquisition of treasury stock

Which of the following items would be subtracted from acro basis net income in determining cash blows from operating activities using the indirect method?

An increase in inventory

Which of the following are true of deferred income taxes with regards to an indirect method cash flow statement

An increase in net deferred tax liabilities must be added to accrual-basis net income in the cash flow statement. A decrease in net deferred tax liabilities must be subtracted from accrual-basis net income.

Why are changes in inventory due to acquisitions not included as part of the adjustments to accrual basis income to arrive at operating cash flow's

Changes due to acquisitions do not create a corresponding acro adjustment to cost of good sold on the income statement

Technological feasibility is establish with the company has

Completed a detailed program design or a working model

An increase in inventory

Decreases operating cash flow's using the indirect method

An example of an item that was excluded from accrual basis income that affected operating cash flow's include all the following except

Depreciation expense

An example of an item that was included in a group bases income but that did not affect operating cash flow's include all the following except

Depreciation expense

Identify the correct statement regarding how depreciation expense affect the statement of cash flows

Depreciation expense must be added back to accrual basis net income using the indirect method

The sections of the cash flow statement include each of the following except

Direct activities

Cash transactions related to the determination of net income are reported in the operating section of the cash flow statement using the

Direct method

Changes in working capital accounts provide major sources and uses invest in cash flows

False

The majority of public companies use the direct method of preparing cash flows from operating activities

False

The reconciliation of net income to net operating cash flow is a requires supplemental disclosure for companies using the indirect method

False

Debt prepayments and extinguishment cost should be classified as ___ Cash flows

Financing

If accounts receivable inspector and it feels to qualify as a sale under GAAP, the proceeds are shown as a

Financing

Is accounts receivable is factored and it fails to qualify as a sale under GAAP, the proceeds are shown as a ___ Cash inflow

Financing

Cash flows that results when a company sells is on stocks or bonds, pays dividends, or issues or repays debt are

Financing activities

Which of the following is not generally helpful in reconciling differences that result from year to year changes in comparative balance sheet accounts not coinciding with the changes implied from accounts reported on the cash flow statements

IRS tax code

Under the direct method, the reconciliation of net income to net cash provided by operating activities would be found

In required supplemental disclosures

Collections on accounts receivable ___ operating cash flow's while payments on accounts payable decrease ___ Cash flows

Increase, operating

Identify the correct statement regarding interest in common interest expense

Interest income and interest expense are components of cash flows from operating activities

Cash flows that result from the purchase or sale of productive assets are

Investing activities

A decrease in prepaid expenses

Is added to acro earnings to obtain operating cash flow see using the indirect method

A decrease and prepaid to rent

Is added to net income to arrive at operating cash outflow

Each lease payment for an operating lease

Is an operating cash flow

Identify the correct statement regarding preparing cash flow from operation see using the indirect method

It adjust for items included in the accrual basis net income that did not affect operating cash flows

Which of the following is true regarding restricted cash

It is required to be included in the cash amounts used to determine the change in cash to which cash flow statement reconciles.

Identify the correct statement regarding software development cost for computer software companies

Once they reach technological feasibility, they are treated as investing cash out blows

The section on the cash flow statement that arises from transactions related to the production and delivery of goods and services to customers is called the ___ Activities section

Operating

The direct method and the indirect method or alternative presentations for presenting cash flows from

Operating activities

If accounts receivable are factors in the transfer qualifies as a sale, the proceeds are shown as a

Operating cash inflow

Improper capitalization ___ Boost operating cash flow because amounts capitalized or later expenses depreciation or amortization

Permanently

A fourth section of the cash flow statements of companies having foreign operations consist of a single line item that

Represents the change in the US dollar equivalent of foreign currency holding due to exchange rate fluctuations

Under the indirect method, began on sale of equipment is

Subtracted from net income to arrive at Cash flow from operating activities

Forester company has provided you the following information for the current year. Which of the following statements is true?

The company purchase $85,000 in buildings and equipment during the year

Gratiot Corporation reported income tax expense of $13,500 on his income statement. How does this affect cash provided by operating activities in a cash flow statement?

The decrease in income taxes payable $525 is subtracted from net income using the indirect method

Which of the following is a reason that some claim to justify their preference of the direct method over the indirect method for computing net cash provided by operating activities

The direct method discloses operating cash flows by category which facilitates cash flow predictions.

Solar corporation reported net income for the current year of $75,000. How does this affect the cash flow statement using the indirect method?

The gain on the sale of equipment is $1275 is subtracted from net income to determine cash flows from operating activities

Solar corporation reported net income for the current year of $75,000. How does this affect the cash flow statement using the indirect method?

The loss on the sale of equipment of $1000 is added back to net income to determine cash flow from operating activities

Holt companies uses the indirect method to prepare a cash flow statement. What could explain the $5000 discrepancy?

The write down of inventory

Identify the correct statement regarding nine cash financing and investing activities

They are not included in the investing and financing activity sections of the cash flow statement

Both the direct method in the indirect method will arrive at the same amount for cash flow from operating activities

True