hw 14

The reconciliation of net income to net cash flow from operating activities is reported under: the direct method only. the indirect method only. both the direct method and the indirect method. neither the direct nor the indirect method.

both the direct method and the indirect method.

To arrive at net cash provided by operating activities using the indirect method, it is necessary to report revenues and expenses on a cash basis. This is done by eliminating the effects of income statement transactions that did not result in a corresponding increase or decrease in cash. re-recording all income statement transactions that directly affect cash in a separate cash flow journal. estimating the percentage of income statement transactions that were originally reported on a cash basis and projecting this amount to the entire array of income statement transactions. eliminating all transactions that have no current or future effect on cash, such as depreciation, from the net income computation.

eliminating the effects of income statement transactions that did not result in a corresponding increase or decrease in cash.

Classify the items as (1) operating—add to net income; (2) operating—deduct from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. Use the indirect method. Purchase of equipment.

investing activity

(1) operating—add to net income; (2) operating—deduct from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. I) Issuance of bonds for land.

significant noncash investing and financing activities.

(1) operating—add to net income; (2) operating—deduct from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. Use the indirect method. e)Exchange of equipment for furniture.

significant noncash investing and financing activities.

(1) operating—add to net income; (2) operating—deduct from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. Use the indirect method. (h)Purchase of treasury stock.

Financing

Of the following questions, which one would not be answered by the statement of cash flows? What was the change in the cash balance during the period? Where did the cash come from during the period? What was the cash used for during the period? Were all the cash expenditures of benefit to the company during the period?

Were all the cash expenditures of benefit to the company during the period?

When preparing a statement of cash flows (indirect method), which of the following is not an adjustment to reconcile net income to net cash provided by operating activities? A change in interest payable. A change in dividends payable. A change in income taxes payable. All of these are answers are correct.

A change in dividends payable.

(1) operating—add to net income; (2) operating—deduct from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. Use the indirect method. c)Sale of building.

investing

(1) operating—add to net income; (2) operating—deduct from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. L)Pension expense exceeds amount funded.

(1) operating—add to net income

(1) operating—add to net income; (2) operating—deduct from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. Use the indirect method. d) Depreciation.

(1) operating—add to net income

(1) operating—add to net income; (2) operating—deduct from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. Use the indirect method. (g)Amortization of intangible assets.

(1) operating—add to net income

(1) operating—add to net income; (2) operating—deduct from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. k)Increase in interest receivable on notes receivabl

(2) operating—deduct from net income;

In 2017, Monty Corporation had net cash provided by operating activities of $486,000, net cash used by investing activities of $976,000, and net cash provided by financing activities of $627,000. At January 1, 2017, the cash balance was $348,000.Compute December 31, 2017, cash. Cash, December 31, 2017____________

485000

(1) operating—add to net income; (2) operating—deduct from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. Use the indirect method. f)Issuance of common stock.

finance

(1) operating—add to net income; (2) operating—deduct from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. J)Payment of dividends.

financing

(1) operating—add to net income; (2) operating—deduct from net income; (3) investing; (4) financing; or (5) significant noncash investing and financing activities. Use the indirect method. (b)Redemption of bonds payable.

financing