ACCT chapter 16

Place the steps to preparing the statement of cash flows in the correct order.

Step 1 Compute net increase or decrease in cash Step 2 Compute net cash from or for operating activities selected Step 3 Compute net cash from or for investing activities selected Step 4 Compute net cash from or for financing activities selected Step 5 Compute net cash from all sources, then prove it

A company reported that its bonds with a par value of $40,000 and a carrying value of $52,000 are retired for $60,000 cash, resulting in a loss of $8,000. The amount to be reported under cash flows from financing activities is _____.

$(60,000)

Blue, Inc., reported net cash flows from operating activities of $120,000, cash flows from investing activities of $300,000, cash flows from financing activities of $80,000, and average total assets of $2,500,000. The company's cash flow on total assets ratio (stated as a percentage rounded to one decimal point) is _____.

4.8%

The following information was reported by three competitors: Armor Biloxi Calliope Cash flows provided (used by) operating activities$(3,000) $(5,000) $75,000 Cash flows provided (used by) investing activities Proceeds from sale of plant assets 29,000 20,000 Purchase of plant assets (40,000)Cash flows provided (used by) financing activities Proceeds from issuance of debt 10,000 Repayment of debt (6,000) (5,000) (15,000) Net increase in cash $20,000 $20,000 $20,000 The company(s) most capable of generating future cash flows is (are):

Calliope

All of the following are correct forms of the accounting equation except:

Cash = Liabilities + Equity + Noncash assets

Cash flow on total assets is computed as:

Cash flow from operations divided by average total assets.

Under the indirect method of preparing the statement of cash flows, decreases in current liabilities should be:

Deducted from net income

The correct order of the three-step analysis of determining cash provided or used by investing activities is:

Identify changes in investing accounts, explain the changes, report the cash flow effects.

Each of the following are classifications in the statement of cash flows except:

Income

The issuance of common stock and declaration and payment of cash dividends will result in the following:

Increase in financing activities for the issuance and a decrease in financing activities for the dividends.

All of the following are sources of information to prepare the statement of cash flows except:

Prior year's income statement

Each of the following are classified as a financing activity except:

purchase of long-term investments

Each of the following are classified as an operating activity except:

purchase of short-term investments

Each of the following are classified as an investing activity except:

receipt of interest revenue

The indirect selected method of reporting adjusts net income to get the net cash provided or used by operating activities.

indirect

A statement of cash flows helps answer all of the following: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.)

what explains the changes in the cash account ? where does a company spends its cash? how does a company receives its cash?

Montego Company's Cash account had a balance of $14,000 on January 1. Analysis of the company's Cash account during the year revealed the following information: Decrease in interest payable$1,000 Depreciation expense 30,900 Gain on retirement of bonds 32,300 Increase in accounts receivable 40,000 Loss on sale of plant assets 5,900 Net income 78,000 The net cash provided (used) by operating activities is:

$41,500

Montego Company's Cash account had a balance of $14,000 on January 1. Analysis of the company's Cash account during the year revealed the following information: Receipts from customers $50,000 Payments for dividends 10,000 Receipts of dividends 5,000 Payments for merchandise 25,000 Receipts from issuance of stock 20,000 On December 31, the company's Cash account had a balance of ____.

$54,000

The Will Company reported the following data for last year: Decrease in the cash account$25,000 Net cash provided by operating activities 20,000 Net cash provided by investing activities 15,000 Based solely on this information, the net cash provided (used) by financing activities on the statement of cash flows would be:

$(60,000)

A machine with a cost of $100,000 and accumulated depreciation of $98,000 is sold for $70,000 cash. The amount that should be reported as a source of cash under cash flows from investing activities is _____.

$70,000

Background information as of 12/31/19: Cash and currency in cash registers $50,000 An investment in a debt security maturing on 2/15/20 25,000 An investment in an equity security 10,000 Checking account balance 20,000 Petty cash 1,000 At December 31, 2019, the amount of cash and cash equivalents that will be reported on the company's balance sheet is? $50,000

$96,000

Under the indirect method of preparing the statement of cash flows, decreases in noncash current operating assets should be:

Added to net income

Under the indirect method of preparing the statement of cash flows, depreciation and amortization should be:

Added to net income

Under the indirect method of preparing the statement of cash flows, increases in current assets should be:

Deducted from net income

Each of the following are classified as a noncash investing or financing activity except:

reissuing treasury stock