chpt 12

Net cash provided by operating activities was $12,000. Net cash provided by investing activities was $2,000. Net cash used in financing activities was $7,000. The cash balance at the beginning of the year was $4,000. The cash balance at the end of the year is:

$11,000 $12,000+2,000-7,000=$7,000. $7,000+4,000=$11,000.

Net cash used in operating activities was $10,000. Net cash provided by investing activities was $2,000. Net cash provided by financing activities was $5,000. The cash balance at the end of the year was $12,000. The cash balance at the beginning of the year was $___

$15,000

Which of the following items would be correct adjustments to net income to arrive at cash flows from operating activities, using the indirect method? (Correct all that apply.)

Add increase in accounts payable Subtract increase in inventory

The statement of cash flows explains the difference between beginning and ending balances of cash and cash equivalents. A cash equivalent must satisfy which of the following criteria? (Check all that apply.)

Be readily convertible to a known amount of cash Be close to maturity

Which of the following items would not be adjusted to net income when computing cash flows from operating activities, using the indirect method?

Cash received from sale of building Nonoperating gains are subtracted from net income using the indirect method. The cash received from sale of a building is reported under the investing activities section.

Cash flows from financing activities identifies cash receipts and cash payments related to which of the following types of accounts? (Check all that apply.)

Common Stock Bonds Payable

Which of the following items are classified as noncash investing and financing activities? (Check all that apply.)

Conversion of preferred stock to common stock Retirement of debt by issuing stock Lease of assets in a long-term lease transaction

Which of the following items would be adjusted to net income when computing cash flows from operating activities, using the indirect method? (Check all that apply.)

Depreciation expense Gain on sale of building Loss on sale of investment

Information about cash flows can influence decision makers in important ways. Which of the following questions could be answered by the statement of cash flows? (Check all that apply.)

Does the company have the resources to pursue opportunities? How does a company spend its cash? Can the company pay its debts?

Accountants can use a three-step process to determine cash provided (or used) by investing activities. Which of the following steps is not part of this process?

Identify adjustments to net income.

To compute cash flows from financing activities, accountants normally analyze changes in all of the following accounts except:

Interest Payable

It is important to analyze the sources and uses of cash because (select all that apply):

Investors use this information to decide if they will purchase their stock. Creditors use this information to assist them in deciding whether to loan funds to them.

Identify which of the following items is a noncash investing and financing activity that must be reported in a note to the statement of cash flows. (Check all that apply.)

Lease of an asset in a long-term lease transaction Retirement of debt by issuing stock

Which of the following items would be adjusted to net income when computing cash flows from operating activities, using the indirect method? (Check all that apply.)

Loss on sale of investment Gain on sale of building Depreciation expense

Identify which of the following items is a noncash investing and financing activity that must be reported in a note to the statement of cash flows. (Check all that apply.)

Retirement of debt by issuing stock Lease of an asset in a long-term lease transaction

Which of the following items would not be a correct adjustment to net income to arrive at cash flows from operating activities, using the indirect method?

Subtract increase in taxes payable

Which of the following statements about the statement of cash flows are correct? (Check all that apply.)

The purpose is to report cash receipts and cash payments during a period. It details the sources and uses of cash.

True or false: The direct method of reporting operating cash flows begins with revenue and adjusts for changes in related balance sheet accounts.

True

Which of the following questions could not be answered from the statement of cash flows?

What are the earnings-per-share of common stock?

Information on the statement of cash flows helps users answer all of the following questions except:

Why did the company invest in long-term assets?

The statement of cash flows reports noncash investing and financing transactions in

a note or separate schedule

A loss from the sale of an investment would be (added/subtracted)___________to (from) net income when computing cash flows from operations, using the indirect method.

added

ed Co.'s beginning Common Stock balance was $110,000 and their ending Common Stock balance was $125,000. This will be reported as _____ in the statement of cash flows.

an increase of $15,000 in the financing activities section

Starfish Shells had a beginning balance in Notes Payable of $35,000 and an ending balance of $40,000. This will be reported as _____ on the statement of cash flows.

an increase of $5,000 in the cash flows from financing activities section

Investors assess cash flows before

buying and selling stock

Which of the following is not one of the five important steps to preparing a statement of cash flows?

compute the net income

A company repaid a long-term debt during the year. They will report this as a(n) (increase/decrease)_______in the ________activities section on the statement of cash flows.

decrease financing

The three-step analysis to determine cash provided or used by investing activities includes:

determining the cash effects using T-accounts and reconstructed entries identifying changes in investing-related accounts reporting the cash flow effects

A cash _____ must satisfy two criteria: (1) be readily convertible to a known amount of cash and (2) be sufficiently close to maturity so its market value is unaffected by interest rate changes.

equivalent

The three-step process to determine cash provided or used by financing activities includes all of the following steps except:

identify an increase or decrease in cash.

Carol Co. prepares a statement of cash flows starting with net income and then adjusting for items that do not affect cash. Carol Co. is using the (direct/indirect) method of reporting the statement of cash flows.

indirect

A net cash (inflow/outflow)____ occurs when the receipts in a category exceed the payments.

inflow

To compute cash flows from financing activities, accountants normally analyze changes in all of the following accounts except:

interest payable

The indirect method of computing and reporting net cash flows from operating activities involves adjusting _______ ________to obtain the net cash provided or used by operating activities.

net income

Which of the following would be included in the operating section when preparing the statement of cash flows using the indirect method?

net income

A _____ also called a worksheet, can help organize the information needed to prepare a statement of cash flows.

spreadsheet