Deck8

Question 1

Statement of Cash Flows does what under the indirect method?

Answer 1

Reconciles Accrual Basis to Cash Basis

Question 2

What is the formula for reconciling the Accrual Basis of accounting to the Statement of Cash flows under the indirect method for Income?

Answer 2

Change in Cash=Change in Liabilities+Change in Equity - Change in Other Assets
C = L + E - OA

Question 3

What is the formula for reconciling the Accrual Basis of accounting to the Statement of Cash flow under the indirect method for “Expenses”

Answer 3

Change in Cash= -Change in Liabilities + OA (formula is reversed)

Question 4

Upon reconciling Accrual Basis accounting to the Statement of Cash flows, which should be added back (a) Accumulated Depreciation, or (b) Depreciation Expense

Answer 4

(b) Depreciation Expense

Question 5

Why should a gain/loss be added/subtracted to reconcile the Income Statement to the Statement of Cash Flows for Operating Activities under the indirect method?

Answer 5

Because it is not an operating activity

Question 6

If Accounts Receivables increases for the period(or year), that means that ______________________________________.

Answer 6

There were more Sales than Cash collections

Question 7

Which method of Statement of Cash flows does not report operating cash flows in the body of the statement? (a) Direct or (b) Indirect

Answer 7

(b) Indirect

Question 8

If there is no corresponding “Payable” to an “Expense”, then that mean what?

Answer 8

There had to be a corresponding cash outflow, so the expense could be used identify a cash outflow on the Statement of Cash Flows.

Question 9

Accounts Receivable and Allowance for Accounts Receivable are not usually netted for figuring Operating Activities on the Statement of Cash Flows

Answer 9

False - Remember to Net those unless otherwise specified

Question 10

“Gain on Sale” and “Amortization of Bond Discount” are not reconciling items, not cash flows. Are they both subtracted on the Reconciliation of Net Income to the Statement of Cash Flows?

Answer 10

Yes

Question 11

Beginning Notes Payable + Notes Issued + Cash =

Answer 11

Ending Notes Payable

Question 12

Should treasury stock transactions be added back to net income using the indirect method Statement of Cash Flows?

Answer 12

No. They are not operating income and never affect net income.

Question 13

Dividends are what type of a Cash Flow? Operating, Investing or Financing

Answer 13

Operating

Question 14

Change in the Unamortized Bond Discount is reported in the Statement of Cash Flows as:

Answer 14

An addition to the Net Income in the operating activities section