ch 23
When preparing a statement of cash flows (indirect method), which of the following is not an adjustment to reconcile net income to net cash provided by operating activities
A change in dividends payable
In a statement of cash flows, the cash flows from investing activities section should report
A major repair to machinery charged to accumulated depreciation
Cash equivalents are
All of these answers are correct
The first step in the preparation of the statement of cash flows requires the use of information included in which comparative financial statements?
Balance sheets
A company borrows $10,000 and signs a 90-day non-trade note payable. In preparing a statement of cash flows (indirect method), this event would be reflected as a(n)
Cash inflow from financing activities
The amortization of bond premium on long-term debt should be presented in a statement of cash flows (using the indirect method for operating activities) as a(n)
Deduction from net income
Which of the following would be classified as a financing activity on a statement of cash flows?
Deposit to a bond sinking fund
To arrive at net cash provided by operating activities, it is necessary to report revenues and expenses on a cash basis. This is done by
Eliminating the effects of income statement transactions that did not result in a corresponding increase or decrease in cash
Which of the following is shown on a statement of cash flows
None of these answers are correct
Which of the following is false concerning the statement of cash flows
The FASB requires companies to classify all income taxes paid as operating cash outflows
which of the following statements about the statement of cash flows is correct
The direct method is more consistent with the primary purpose of the statement of cash flows
How should significant noncash transactions be reported in the statement of cash flows according to FASB Statement No. 95?
These noncash transactions are not to be incorporated in the statement of cash flows
Of the following questions, which one would not be answered by the statement of cash flows
Were all the cash expenditures of benefit to the company during the period?
The primary purpose of the statement of cash flows is to provide information
about cash receipts and cash payments of an entity during a period
When using the indirect method to prepare the operating section of a statement of cash flows, which of the following is ADDED to net income to compute cash provided by/used by operating activities
amortization of patent
When preparing a statement of cash flows (indirect method), an increase in ending inventory over beginning inventory will result in an adjustment to reported net earnings because
cost of goods sold on an accrual basis is lower than on a cash basis
An increase in inventory balance would be reported in a statement of cash flows using the indirect method (reconciliation method) as a(n)
deduction from net income in arriving at net cash flow from operating activities
When using the indirect method to prepare the operating section of statement of cash flows, which of the following is DEDUCTED from net income to compute cash provided by/used by operating activities
gain on sale of land
In reporting extraordinary transactions on a statement of cash flows (indirect method), the
gross amount of extraordinary gain should be deducted from net income
An objective of the statement of cash flows is to
provide information about the operating, investing, and financing activities of an entity during a period
In determining net cash flow from operating activities, a decrease in accounts payable during a period
requires an increase adjustment to cost of goods sold under the direct method
A statement of cash flows typically would not disclose the effects of
stock dividends declared