Statement of Cash Flows

Question 1

What items are included in operating activities on the Statement of Cash Flows?

Answer 1

Cash received from Customers- Interest & Dividends- Trading Securities

Cash paid to Vendors- Suppliers- Interest- Taxes- Trading Securities

Question 2

What items are included in investing activities on a Statement of Cash Flows?

Answer 2

Cash received: Sale of PP&E- Sale of Investments- Loan Principle

Cash paid: Loans- Acquisitions- AFS or HTM Securities- Taxes- Trading Securities

Question 3

What items are included in Financing Activities in a Statement of Cash Flows?

Answer 3

Cash received: Issuance of Stock- Issuance of Debt

Cash paid: Dividends

Question 4

What is the direct method for a Statement of Cash Flows?

Answer 4

Starts with Income from Continuing Operations

Adjusts for changes in accounts like A/R- A/P- Inventory and non-cash revenues- expenses- gains- losses

If used- the Indirect Method must also be shown

Question 5

What is the Indirect Method for a Statement of Cash Flows?

Answer 5

Starts with Net IncomeAdjusts for changes in accounts like A/R- A/P- Inventory and non-cash revenues- expenses- gains- losses

Question 6

cash collections from customers (direct)

Answer 6

operating activity

Question 7

payments for purchase of PP&E

Answer 7

investing

Question 8

proceeds from sale of equipment

Answer 8

investing

Question 9

cash dividends paid

Answer 9

financing

Question 10

redemption of bonds payable

Answer 10

financing activity

Question 11

loss on sale of fixed assets (indirect)

Answer 11

operating

Question 12

issuance of common stock of the company

Answer 12

financing

Question 13

decrease in accounts payable (indirect)

Answer 13

operating activity

Question 14

decrease in deferred taxes (indirect)

Answer 14

operating

Question 15

working capital loan received from a bank

Answer 15

financing

Question 16

impact on cash flow direct: depreciation expense increased over previous year

Answer 16

no effect

Question 17

impact on cash flow direct: payment of income taxes previously deferred due to tax vs. financial depreciation differences

Answer 17

decrease

Question 18

impact on cash flow direct: net A/R lowered

Answer 18

increase

Question 19

impact on cash flow direct: booked gain on sale of equipment with one year of useful life remaining

Answer 19

no effect

Question 20

impact on cash flow direct: A/P is lower than in previous year

Answer 20

decrease

Question 21

impact on cash flow direct: stock held by company as A-F-S is sold for a loss

Answer 21

no effect

Question 22

impact on cash flow direct: one month rent prepaid to be occupied in next fiscal year

Answer 22

decrease

Question 23

impact on cash flow direct: portion of outstanding debt issuances are called in at a price above par

Answer 23

no effect

Question 24

impact on cash flow direct: interest payments are made for remaining company bonds outstanding

Answer 24

decrease

Question 25

impact on cash flow direct: interest received on a bond classified as held to maturity

Answer 25

increase

Question 26

impact on cash flow direct: deferred revenue increases over the previous year

Answer 26

increase

Question 27

impact on cash flow direct: $40,000 in returned goods and issued refunds to customer

Answer 27

decrease

Question 28

how should bond amortization discount on long term debt be reported in the statement of cash flows using indirect method?

Answer 28

as a deduction of income in operating cash flows