Questions and Answers
The Statement of Cash Flow reports:
The statement of cash flows reports:
A cash equivalent is an investment that:
The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is:
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The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:
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The appropriate section in the statement of cash flows for reporting the receipt of cash dividends from investments in securities is:
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Which one of the following is representative of typical cash flows from operating activities?
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Typical cash flows from investing activities include:
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Cash flows from interests received are reported in the statement of cash flows as part of:
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The accounting principle that requires significant non-cash financing and investing activities be reported on the statement of cash flows is the:
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The purchase of long-term assets by issuing a note payable for the entire amount is reported on the statement of cash flows in the:
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Non-cash investing and financing activities may be disclosed in:
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An example of a transaction that must be disclosed as a non-cash investing and financing activity includes:
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The statement of cash flows helps analysts evaluate the:
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The cash flow on total assets ratio:
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Study Notes
Statement of Cash Flows
- Reports cash inflows and outflows for an accounting period.
- Includes cash flows from operating, investing, and financing activities.
Components of Cash Flow Statement
- Cash flows from operating activities encompass receipts from sales and payments to suppliers.
- Investing activities involve payments for property, plant, equipment, and securities.
- Financing activities include cash received from issuing stock or debt and cash paid for dividends.
Cash Equivalents
- Investments readily convertible to a known amount of cash.
- Typically have a maturity date within three months and are highly liquid.
Purchasing Equipment
- Reported in the investing activities section of the cash flow statement.
Issuance of Common Stock
- Reported in the financing activities section of the cash flow statement.
Receipt of Cash Dividends
- Classified under operating activities in the cash flow statement.
Typical Cash Flows from Operating Activities
- Receipts from cash sales represent a common cash inflow from operating activities.
Cash Flows from Investing Activities
- Include payments for long-term assets, collections on notes receivable, and acquiring securities.
Interest Received
- Reported as part of operating activities in the statement of cash flows.
Non-Cash Financing and Investing Activities
- Disclosed in the statement through a note or separate schedule.
- May include transactions like retiring debt through equity issuance or capital leases.
Importance of Cash Flow Statement
- Helps evaluate sources of cash for debt repayments and plant expansion.
- Highlights differences between income and net operating cash flow.
Cash Flow on Total Assets Ratio
- Indicates earnings quality and is affected by accounting principles related to income recognition.
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Description
Prepare for your accounting final with these flashcards focusing on the statement of cash flows. Each card provides essential definitions and descriptions to help solidify your understanding of cash inflows, outflows, and related activities. Review key terms and concepts to excel in your exam.
