Accounting Ch. 11

Changes in current assets and current liabilities Noncash items Nonoperating items

Adjustments to net income in calculating operating cash flows include:

What does the statement of cash flows communicate?

Cash inflows and outflows from operating, investing, and financing activities.

financing

Cash inflows and outflows involving stockholders and creditors are classified on the statement of cash flows as___________________activities.

related cash may be higher or lower than the accrued amount included in net income

Changes to current assets and current liabilities require adjustment of net income under the indirect method because

noncash

Depreciation expense and amortization expense represent_____________________ items requiring adjustments to net income under the indirect method.

noncash

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

added to net income.

Grant's income statement reveals a loss from the sale of land. In preparing the operating activities section of the statement of cash flows using the indirect format, the loss should be

the change in the cash balance.

In a statement of cash flows, the sum of cash inflows and outflows is equal to________

long-term liability and stockholders' equity accounts

In order to determine cash flows from financing activities, we need to examine changes to

$215,000

Neue Inc. reports sales revenue of $200,000; in addition, its accounts receivable balance decreased by $15,000. Neue's cash flows from sales were:

financing

Repayments of formal, long-term debt contracts are classified as ______ activities.

investing activities

The purchase and sale of long-term assets and current investments are classified as____________

net income

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

Balance sheet

Which financial statement is for a period of time?

gains from sale of long-term assets losses from sale of long-term assets

Which of the following nonoperating items require adjustments to net income under the indirect method?

calculate the net cash flows from operating activities

Which of the following represents the first step in preparing a statement of cash flows in the correct order?

Depreciation expense originally reduced net income, but it is a noncash expense.

Which of the following statements best describes the reason depreciation expense is added to net income when preparing the statement of cash flows?

Sale of a machine for cash.

Which of the following would result in a cash inflow from investing activities?

operating

____________activities include cash receipts and cash payments for transactions relating to revenue and expense activities.

Calculate the change in the beginning and ending balance of cash

Joann is preparing a statement of cash flows as part of a homework assignment. She hopes to find a check figure that will help her assess the accuracy of her results. What should Joann do to quickly find a check figure?

inflows; outflows

The statement of cash flows provides summary information about cash_______________ and cash____________ during the year.

Gains on the sale of long-term assets Losses on the sale of long-term assets

Which of the following are nonoperating items that require adjustments under the indirect method?

Sale of investments Sale of building Sale of equipment

Which of the following cash transactions are classified as cash inflows from investing activities?

Receiving dividend

Which of the following is an operating activity?

Collection from customers Collection of interest

Which of the following items are classified as cash inflows from operating activities on the statement of cash flows?

1. calculate the net cash flows from operating activities 2. determine the net cash flows from investing activities 3. determine the net cash flows from financing activities 4. combine operating, investing, and financing activities

List the four steps in preparing a statement of cash flows in the correct order.

net income

Noncash items, nonoperating items, and changes in current assets and liabilities are necessary adjustments to _____________ _______________, to prepare the operating section for the indirect format of the statement of cash flows.

convert items included in net income to cash.

One of the purposes of adjusting net income for changes to certain balance sheet accounts is to

operating, investing, and financing

The statement of cash flows classifies items as_________

amounts presented in the income statement.

When cash from operating activities is presented using the indirect method, net income must be adjusted for increases and decreases in balance sheet accounts that relate to

Accounts receivable Inventory Accounts payable

Which of the following accounts result in adjustments to net income under the indirect method of preparing the statement of cash flows if their balances change during the year?

purchase of long-term investments purchase of land Purchase of building

Which of the following are cash outflows from investing activities?

Sale of land Sale of equipment

Which of the following are classified as cash inflows from investing activities?

Purchase of an investment Purchase of land

Which of the following are classified as cash outflows from investing activities?

Collection on account Interest received on notes receivable

Which of the following items are classified as cash inflows from operating activities on the statement of cash flows?

payment on account Payment of salaries

Which of the following items are classified as cash outflows from operating activities on the statement of cash flows?

purchase of supplies Interest paid on bonds payment on account

Which of the following items are classified as cash outflows from operating activities on the statement of cash flows?

A loss on the sale of equipment

Which of the following items is added to net income with the indirect method?

Collection of interest Collection from customers

Which of the following items are classified as cash inflows from operating activities on the statement of cash flows?