Ch 11 videos
Using the indirect method, we start with net income and adjust this number for (1) revenue and expense items that do not affect cash, (2) gains and losses that do not affect operating cash flows, and (3) changes in current assets and current liabilities, to arrive at the net cash flows from operating activities. Net cash flows from operating activities uses information from all of the following sources, except the _____. Multiple Choice current liabilities section of the balance sheet stockholders' equity section of the balance sheet current assets section of the balance sheet income statement
stockholders' equity section of the balance sheet
Using the indirect method, we start with net income and adjust this number for (1) revenue and expense items that do not affect cash, (2) gains and losses that do not affect operating cash flows, and (3) changes in current assets and current liabilities, to arrive at the net cash flows from operating activities. Fallon Corporation reports net income of $370,000. Accounts Receivable balances at the beginning and end of the year were $40,000 and $48,000, respectively. Beginning and ending Inventory balances were $60,000 and $54,000, respectively. What is the company's cash inflows from operating activities? Multiple Choice $356,000 $384,000 $372,000 $368,000
$368,000
Windsor, Inc., reported $100,000 as cost of goods sold during the current year. Inventory increased by $5,000 during the year and accounts payable decreased by $10,000. What was the cash amount the company paid to suppliers during the year? Multiple Choice $95,000 $85,000 $110,000 $115,000
115,000
Freddy Corporation reports income tax expense of $70,000. Income tax payable at the beginning and end of the year are $5,000 and $10,000, respectively. What is the amount of cash paid for income taxes? Multiple Choice $70,000 $65,000 $60,000 $75,00
65,000
For the current year, Klay Corporation reports the following information: Net cash inflows from investing activities:$40,000 Net cash inflows from financing activities:$45,000 Cash at the beginning of the year: $340,000 Cash at the end of the year:$420,000 What was the company's cash flows from operating activities?
A cash outflows of $5,000
Which of the following would not appear in the statement of cash flows under the direct method? Multiple Choice Cash paid for interest Cash received from customers Cash paid to suppliers Depreciation expense
Depreciation expense
The steps in preparing the statement of cash flows involve calculating: (1) net cash flows from operating activities, (2) net cash flows from investing activities, (3) net cash flows from financing activities, and (4) the sum of these three activities to verify it equals the amount of cash reported in the balance sheet this year versus last year (the change in cash).Companies choose between the indirect method and the direct method in reporting operating activities in the statement of cash flows. The indirect method begins with net income and then list adjustments to net income, in order to arrive at operating cash flows. The direct method specifically lists the various cash inflows and outflows from operations. The investing and financing sections of the statement of cash flows are identical under both methods. The first step involved in preparing the statement of cash flows is: Multiple Choice Determine net cash flows from investing activities Determine net cash flows from operating activities Combine the operating, investing, and financing activities Determine net cash flows from financing activities The first step involved in preparing the statement of cash flows is: Multiple Choice Determine net cash flows from investing activities Determine net cash flows from operating activities Combine the operating, investing, and financing activities Determine net cash flows from financing activities
Determine net cash flows from operating activities
Which of the following is an example of a cash outflow for a financing activity? Multiple Choice Payment of cash for the purchase of equipment Payment of cash for interest expense Payment of cash for treasury stock Payment of cash for supplies
Payment of cash for treasury stock
Operating activities generally relate to income statement items and changes in current assets and current liabilities. Investing activities primarily involve changes in long-term assets. Financing activities primarily involve changes in long-term liabilities and stockholders' equity. Which of the following is an example of a noncash activity? Multiple Choice Purchase of long-term assets by issuing debt Purchase of investments with cash Reacquisition of a company's own stock from the market Sale of an intangible asset
Purchase of long-term assets by issuing debt
Cash transactions (inflows and outflows) involving long-term assets and current investments are reported in the investing activities section of the statement of cash flows. Typical investing activities include buying and selling property, plant, and equipment, as well as making and collecting loans. Which of the following is an example of a cash inflow from an investing activity? Multiple Choice Receipt of cash from the issuance of bonds Receipt of cash from the issuance of common stock Receipt of cash from the sale of equipment Receipt of cash from customers
Receipt of cash from the sale of equipment