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Exam 12: Reporting and Analyzing Cash Flows

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Question 21

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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.

A) True
B) False

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Question 22

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Cash flow amounts and their timing should be considered when planning and analyzing operating activities.

A) True
B) False

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Question 23

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Use the following information to calculate cash received from dividends:

A machine with a cost of $130,000,current year depreciation expense of $17,000 and accumulated depreciation of $85,000 is sold for $40,000 cash.The total amount that should be reported in the operating section of the statement of cash flow as per indirect method is:

Northington,Inc.is preparing the company's statement of cash flows for the fiscal year just ended.Using the following information,determine the amount of cash flows from investing activities:

Tate Company's 20X2 income statement and changes in selected balance sheet accounts are given below.Calculate the company's net cash provided or used by operating activities using the direct method. The company also experienced the following during 20X2:

Alvez Company reports net income of $305,000 for the year ended December 31.It also reports $93,700 depreciation expense and a $10,000 loss on the sale of equipment.Its comparative balance sheet reveals a $40,200 increase in accounts receivable,a $10,200 decrease in prepaid expenses,a $15,200 increase in accounts payable,a $12,500 decrease in wages payable,and a $100,000 decrease in notes payable.Calculate the cash provided (used) in operating activities using the indirect method.

The FASB requires a reconciliation of net income to net cash provided or used by operating activities when the direct method is used (which can be reported in the notes).

Financing activities include receiving cash dividends from investments in other companies' stocks.

________ activities generally include those transactions and events that affect long-term assets.

The cash flow on total assets ratio:

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

Fernwood Company is preparing the company's statement of cash flows for the fiscal year just ended.The following information is available: The amount of cash paid for dividends was:

A company's income statement showed the following: net income,$134,000; depreciation expense,$30,000; and gain on sale of plant assets,$4,000.An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,400; merchandise inventory increased $18,000; prepaid expenses increased $6,200; accounts payable increased $3,400.Calculate the net cash provided or used by operating activities.

When analyzing the changes on a spreadsheet used to prepare a statement of cash flows,the cash flows from financing activities generally affect:

Define and explain significant noncash investing and financing activities and the method of reporting them on the statement of cash flows.

Analysis reveals that a company had a net increase in cash of $20,000 for the current year.Net cash provided by operating activities was $18,000; net cash used in investing activities was $10,000 and net cash provided by financing activities was $12,000.If the year-end cash balance is $24,000,the beginning cash balance was:

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.

To be classified as a cash equivalent,the only criterion an item must meet is that it must be readily convertible to a known amount of cash.

Probably the most important section of the statement of cash flows in analyzing the financial performance of a company's ongoing business is the ________ section.