Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Accounting 3332 > Chapter 23: Statement of Cash Flows > Flashcards

Chapter 23: Statement of Cash Flows Flashcards

(62 cards)

Start Studying
1
Q

The statement of Cash Flows is required for…

A

GAAP

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q
  • presents information about cash flows that the other statements only provide indirecty
  • converts “accrual basis” net income to “cash basis”
A

Statement of cash flows

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the GAAP requirements?

A
  • explains the change in cash and cash equivalents
  • cash equivalents: highly liquid investments that can be converted to cash in less than 3 month
  • transactions between cash and cash equivalents are not reported
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the major components of the statement of cash flows?

A
  • operating activities (OA)
  • investing activities (IA)
  • financing activities (FA)
  • Noncash investing and financing activities
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Cash flows from ongoing operatiions.

A

operating activities (OA)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Purchase and disposal of operational assets, investments, and non-trade receivables.

A

investing activities (IA)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

All debt and equity financing transactions.

A

financing activities (FA)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q
  • reported as a supplement either narrative or schedule form

- noncash transactions that do not affect assets or liabilities (i.e. stock dividend) are not reported

A

noncash investing and financing activities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are two examples of noncash investing and financing activities?

A
  • conversion of debt to equity

- acquiring an asset through a capital lease

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the two preparation methods for the statement of cash flows?

A

direct and indirect methods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Statement of Cash Flow Method?

  • reports components of cash flows from OA as gross receipts (i.e. customers) and gross payments (i.e. suppliers)
  • requires a reconciliation of net income to cash flows from OA
  • FASB preferred method; however, it is not commonly used
A

direct method

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Statement of Cash Flow Method?

  • reports components of cash flows from OA as gross receipts (i.e. customers) and gross payments (i.e. suppliers)
  • requires a reconciliation of net income to cash flows from OA
  • FASB preferred method; however, it is not commonly used
A

direct method

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Statement of Cash Flow Method?

  • adjusts “accrual basis” net income to “cash basis” cash flows from operating activities
  • Goal: reconcile earnings effect to operating cash flow effect
A

indirect method

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Cash flows from what type of activities are the same under both the indirect and direct method?

A
  • investing activities

- financial activities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

In the indirect method, the items needed to prepare the statement are…

A
  • comparative balance sheet
  • income statement
  • selected transaction data
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q
  • net income

- adjustments to reconcile net income to net cash provided

A

cash flows from operating activities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

In the operating activities, depreciation, amortization of intangibles and bond discounts, and bad debt expense are all types of….

A

non-cash expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Non-cash expenses are ___ in the operating activities section in the statement of cash flow.

A

added

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

In the operating activities, income from an equity method investment and amortization for bond premium are types of…

A

non-cash revenues

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Non-cash revenues are ___ in the operating activities section in the statement of cash flow.

A

subtracted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

In the operating activities, lales of PPE, investments, and extraordinary items are types of…

A

losses/gains on peripheral activity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

losses/gains on peripheral activity are ___ in the operating activities section in the statement of cash flow.

A

added/subtracted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Increases and decreases in current assets and liabilities are all types of…

A

changes in current assets and liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Increases in current assets are ___ in the operating activity section in the statement of cash flow.

A

subtracted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Decreases in current assets are ___ in the operating activity section in the statement of cash flow.
added
26
Increases in current liabilities are ___ in the operating activity section in the statement of cash flow.
added
27
Decreases in current liabilities are ___ in the operating activity section in the statement of cash flow.
subtracted
28
What type of activity from the statement of cash flow is cash received from dividends and interest?
operating activity
29
Activity? Inflow or Outflow? | - purchase of property and equipment
investing activity; outflow
30
Activity? Inflow or Outflow? | - sale of property and equipment (total proceeds)
investing activity; inflow
31
Activity? Inflow or Outflow? | - purchase of investment
investing activity; outflow
32
Activity? Inflow or Outflow? | - sale of investments (total proceeds)
investing activity; infow
33
Activity? Inflow or Outflow? | - issuance of L/T notes receivables
investing activity; outflow
34
Activity? Inflow or Outflow? | - collections of principal of notes receivables
investing activity; inflow
35
Activity? Inflow or Outflow? | - issuance of debt (gross)
financing activity; inflow
36
Activity? Inflow or Outflow? | - payments on debt (gross)
financing activity; outflow
37
Activity? Inflow or Outflow? | - issuance of stock
financing activity; inflow
38
Activity? Inflow or Outflow? | - reacquisition of stock
financing activity; outflow
39
Activity? Inflow or Outflow? | - payment of dividends
financing activity; outflow
40
How is the total change in cash and cash equivalents calculated?
OA + IA + FA
41
Supplemental operating cash flow information includes...
- cash paid for interest | - cash paid for taxes
42
- changes in current taxes payable and deferred tax assets and liabilities are recorded in operating activities - deferred tax expense is recorded as a reconciling item from net income to operating cash flows
income taxes, current and deferred
43
Adjust net income from the difference between Pension expense and funding.
postretirement benefits
44
- cash flows from purchase and sale of investments | - gains/losses on investment securities
investments in trading and available for sale securities
45
Trading securities falls under what activity in the statement of cash flow?
operating activities
46
Available for sale securities falls under what activity in the statement of cash flows?
investing activities
47
Type of security? | - record reconciling items to offset unrealized and realized gains/losses to reflect "actual cash flows."
trading securites
48
Type of security? - unrealized gains/losses dont affect income (only equity) or operating cash flows (only investing); no adjustment. - record reconciling item to offset realized gains/losses to reflect operating cash flow effect of $0.
available for sale securities
49
- investor increases its investment for % of earnings and decreases its investment for % of dividends - adjust the "income effect" by subtracting the % of investee earnings (noncash revenue item). - record an operating cash inflow for dividends received
equity method investment
50
- present the net change in A/R (including the allowance) | - present the change in Gross A/R and a separate reconciling item for "bad debt expense"
accounts receivable
51
- usually affects investing or financing activities - record and adjustment to offset the income effect of extraordinary items (gross amount) because they do not impact operating activities
extraordinary items
52
Operating, Investing, or Financing? Proceeds from sale of land
investing
53
Operating, Investing, or Financing? Purchase of treasury stock
financing
54
Operating, Investing, or Financing? Issuance of long term bonds
financing
55
Operating, Investing, or Financing? acquisition of stock of another corporation
investing
56
Operating, Investing, or Financing? Payment of semi-annual interest on bonds payable
operating
57
Operating, Investing, or Financing? Payment of a cash dividend
financing
58
Operating, Investing, or Financing? Receipt of a cash dividend
investing
59
Operating, Investing, or Financing? Purchase of a building
investing
60
Operating, Investing, or Financing? Cash dividends received on an equity method investment
operating
61
Operating, Investing, or Financing? Payment of income taxes
operating
62
Operating, Investing, or Financing? Issuance of common stock for cash
financing

Accounting 3332 (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions