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Exam 12: Reporting Cash Flows

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Question 1

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Most managers stress the importance of understanding and predicting cash flows for business decisions.

A) True
B) False

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Question 2

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The accountant for Huckleberry Company is preparing the company's statement of cash flows for the fiscal year just ended.The following information is available: $\begin{array} { | l | r | } \hline \text { Retained earnings balance at the beginning of the year } & \$ 151,000 \\\hline \text { Cash dividends declared for the year } & 46,000 \\\hline \text { Net income for the year } & 92,000 \\\hline\end{array}$ What is the ending balance for retained earnings?

A) $264,000.
B) $13,000.
C) $243,000.
D) $197,000.
E) $105,000.

F) C) and D)
G) A) and E)

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Question 3

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The reporting of investing activities in the statement of cash flows is identical under either the direct or indirect methods.

Faster Freight Co.reported net cash provided by operating activities of $142.7 million and average total assets of 1,762.5 million at the end of the year.Calculate the cash flow on total assets ratio for Faster Freight.

In preparing a company's statement of cash flows for the most recent year using the indirect method,the following information is available: $\begin{array} { | l | r | } \hline \text { Net income for the year was } & \$ 52,000 \\\hline \text { Accounts payable decreased by } & \$ 18,000 \\\hline \text { Accounts receivable increased by } & \$ 25,000 \\\hline \text { Inventories increased by } & \$ 5,000 \\\hline \text { Cash dividends paid were } & \$ 14,000 \\\hline \text { Depreciation expense was } & \$ 20,000 \\\hline\end{array}$ Net cash provided by operating activities was:

Use the following information to calculate cash paid for income taxes: $\begin{array}{l}\text { Income tax expense } \$ 50,000\\\begin{array}{|l|l|}\hline \text { Income tax payable, January 1 } & 9,000 \\\hline \text { Income tax payable, December 31 } & 7,000\end{array}\end{array}$

Use the following information to calculate cash paid for income taxes: $\begin{array} { | l | r | } \hline \text { Income tax expense } & \$ 43,000\\\hline \text { Income tax payable, January 1 } & 9,100 \\\hline \text { Income tax payable, December } 31 & 10,200 \\\hline\end{array}$

The cash flow on total assets ratio is calculated by:

A cash equivalent must be readily convertible to a known amount of cash,and must be sufficiently close to its maturity so its market value is unaffected by interest rate changes.

When preparing the operating activities section of the statement of cash flows using the direct method,non-operating gains are added to net income.

Receipts of cash dividends and interest earned on loans are classified as investing activities.

The appropriate section in the statement of cash flows for reporting the purchase of land in exchange for common stock is:

Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities.

Use the following information to calculate cash received from dividends: $\begin{array} { l r } \text { Dividends revenue } & \$ 63,500 \\\text { Dividends receivable, January 1 } & 3,600 \\\text { Dividends receivable, December } 31 & 3,100\end{array}$

When using a spreadsheet to prepare the statement of cash flows,an increase in accounts payable is entered in the Analysis of Changes columns with a debit in the statement of cash flows section and a credit in the balance sheet section.

The gain or loss from retirement of debt is reported under cash flows from operating activities on the statement of cash flows using the indirect method.

Rowan,Inc.'s,income statement is shown below.Based on this income statement and the other information provided,calculate the net cash provided by operations using the indirect method.

A cash dividend payment to shareholders during the year should be reported on the statement of cash flows as:

The direct method separately lists each major item of operating cash receipts and cash payments.

________ activities include the cash effects of transactions and events that determine net income.