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Exam 15: The Statement of Cash Flows

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Question 41

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Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Depletion Expense-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

A) Add to net income to arrive at net cash flows from operating activities.
B) Subtract from net income to arrive at net cash flows from operating activities.
C) Not used to adjust net income to calculate net cash flows from operating activities.

D) A) and B)
E) A) and C)

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Question 42

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Marla Co.sells equipment with a carrying value of $90,000 for $70,000.Where,and for what amounts,would this transaction appear on a statement of cash flows using the indirect method?

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First,the loss on sale of $20,000 would ...

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Question 43

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Lincoln Company engaged in this transaction: Paid income taxes. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Decrease in Inventory-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Use this information to answer the following question. Northbrook Corporation is preparing a statement of cash flows.The following transactions occurred during the year: 1) Sold machinery for $9,000 cash. 2) Purchased a building for $80,000 cash. 3) Issued $70,000 worth of stock to acquire an airplane. 4) Converted long-term bonds by issuing $100,000 worth of stock. 5) Declared and paid a $10,000 cash dividend. Transaction 3 would be found on the statement of cash flows in the

If the indirect method is used to prepare a statement of cash flows,which of the following would be added to net income to arrive at net cash flows from operating activities?

In preparing a statement of cash flows using the indirect method,a decrease in an unearned revenue account should

Which of the following items would not be included in a statement of cash flows prepared using the indirect method?

A decrease in plant assets shown in the investing activities section of the statement of cash flows would be presented based on the amount of the resulting gain or loss incurred.

If net cash flows from operating activities were $388,000,net income were $100,000,and net sales were $1,200,000,the cash flow yield would equal (Round amounts to two decimal places)

Lincoln Company engaged in this transaction: Received dividends on marketable securities held as a long-term investment. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

When a statement of cash flows is prepared using the indirect method,

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Decrease in Accrued Liabilities-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

What does it mean when a company has positive free cash flow? What does it mean when a company has negative free cash flow?

The indirect method of preparing a statement of cash flows

Under the indirect method,gains or losses from the sale of equipment used in operations would appear as adjustments in the cash flows from operating activities section of the statement of cash flows.

The statement of cash flows shows the effects on net income of a company's operating,investing,and financing activities for an accounting period.

Noncash investing and financing transactions

How are cash equivalents treated on a statement of cash flows?

When presenting decreases in long-term investments in the investing activities section of the statement of cash flows,the amount reflected equals the amount of the gain(s)or loss(es)from the transaction(s).