Virtual Class 4-1
cash flow from investing activities
(purchase of equipment) sale of land collection of notes receivable
Which of the following methods may be used to report comprehensive income?
In a single, continuous statement of comprehensive income In two separate, but consecutive statements, an income statement and a statement of comprehensive income.
How is accumulated other comprehensive income reported?
In the balance sheet as a component of shareholders' equity
Which of the following summarizes the purpose of the statement of cash flows?
It provides information about the cash receipts and cash disbursements of an enterprise. The balance sheet provides information useful for assessing future cash flows, liquidity, and long-term solvency.The income statement summarizes the profit-generating transactions that caused shareholders' equity (retained earnings) to change during the period.The statement of shareholders' equity discloses the sources of changes in the permanent shareholders' equity accounts.The statement of cash flows provides information about the cash receipts and cash disbursements of an enterprise.
Which of the following is an investing activity on the statement of cash flows?
Sale of the old factory after the company moves into a new factory. Cash flows from investing activities include inflows and outflows of cash related to the acquisition and disposition of long-lived assets used in the operations of the business such as property, plant, and equipment. Issuing common stock is a financing activity and collecting a tax refund and an ordinary account receivable are operating activities.
Which of the following activities affects operating cash inflows?
Selling 100 units of inventory for cash. Paying an account payable is a cash outflow. Selling old factory equipment is an inflow, but it is an investing inflow. Borrowing money from the bank is an inflow, but it is a financing inflow. Selling inventory for cash is an operating activity and an inflow of cash.
cash flow from operating activities
cash received from customers cash received for interest (cash paid for interest) (cash paid for operating expenses)
cash flow from financing activities
issuance of common stock (dividends paid to shareholders)
O'Reilly Beverage Company reported net income of $770,000 for 2021. In addition, the company deferred a $45,000 pretax loss on derivatives and had pretax net unrealized gains on debt securities of $20,000. Prepare a separate statement of comprehensive income for 2021. The company's income tax rate is 25%.
net income = $770,000 Loss on derivatives = $45,000 - ($45,000 × 25%) = ($33,750) Gain on debt securities = $20,000 - ($20,000× 25%) = $15,000 total O.C.I. = (18750) comprehensive income loss = $751250 (770000-18750)
Fortuna Company is preparing its statement of cash flows. Cash disbursements during the year included: Payment for a new stamping machine $200,000 Payment of dividends to stockholders 100,000 Payment to acquire 100 shares of Lola Corp. 40,000 What are Fortuna's total cash outflows for financing activities?
100,000 The purchase of a new stamping machine is an outflow, but it is an investing activity. The purchase of Lola Corp's stock is also an outflow and an investing or operating activity, depending on the securities involved. The payment of dividends to stockholders is both an outflow and a financing activity.