Questions and Answers
The operating activities section has a relationship with which part of the balance sheet?
Current assets and current liabilities
Which of the following is an objective of the statement of cash flows?
These are all objectives of the statement of cash flows
All of the following would be included in the operating activities section when preparing the statement of cash flows under the indirect method, except:
How much cash was paid for inventory in 2019 for Our Feathered Friends, Inc.?
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How much cash did Our Taylor, Inc. collect from customers in 2019?
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In the long run, a company must generate positive cash flow from __________ or it will not survive.
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How much cash did Our Feathered Friends, Inc. collect from customers in 2019?
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In calculating cash from operating activities, increases in current liabilities should be:
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How much cash did Our Taylor, Inc. collect from customers in 2019?
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Compute the net cash provided by operating activities for Hayden, Inc. using the indirect method.
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How much cash was paid for inventory in 2019 for Our Taylor, Inc.?
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All of the following would be included in the operating activities section when preparing the statement of cash flows under the indirect method, except:
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Cash flows from investing activities can be discovered by analyzing changes in a company's:
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The activity classifications in the statement of cash flows include:
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The purchase of treasury stock would be included in which section of the statement of cash flows?
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In calculating cash from operating activities, increases in current assets other than Cash should be:
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Cash-related transactions that affect the income statement are included in which section of the statement of cash flows?
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Dividend payments would be included in which section of the statement of cash flows?
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Which of these two companies appears to have made the larger purchases of property, plant, and equipment during the year?
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Using the provided data, determine the net cash provided/used by operating activities for Asakura Corporation for the current year.
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Determine the amount of dividends declared and paid by Thompson, Inc. during the year.
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Receiving of cash dividends would be included in which section of the statement of cash flows?
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Compute the net cash provided by operating activities for Morgan, Inc. using the indirect method.
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Under which section of the statement of cash flows would Luke Land Development's purchase of Land appear?
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Where is the gain resulting from the sale of equipment shown under the indirect method?
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Which financial statement explains why a company's cash balance changed over a period of time?
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Determine the amount of dividends declared and paid by Dad's Towing during the year.
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On the statement of cash flows, which item is classified as an investing activity?
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On the statement of cash flows, increases and decreases in long-term assets resulting from cash transactions are reported as:
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The statement of cash flows is designed for all of the following purposes except:
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Which of the following transactions does not affect cash during a period?
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Study Notes
Cash Decreasing Transactions
- Transactions that decrease cash include purchasing inventory, paying accounts payable, and investing in research and development (R&D) partners.
Statement of Cash Flows
- The operating activities section correlates with current assets and current liabilities on the balance sheet.
- Objectives of the statement of cash flows encompass understanding cash inflows and outflows.
Operating Activities and Cash Flow
- Under the indirect method, a decrease in prepaid expenses leads to a subtraction, while a decrease in accounts payable is added.
- Increases in current liabilities are added to net income in calculating cash from operating activities.
- Increases in current assets, excluding cash, are subtracted from net income.
Cash Collections from Customers
- Cash paid for inventory can be calculated from financial records; for Feathered Friends, Inc., it was $690,000.
- Cash collected from customers can be determined by analyzing accounts receivable; for Taylor, Inc., it was $2,480,000.
Dividends and Financing Activities
- Cash dividend payments are categorized under financing activities in the statement of cash flows.
- Payments made from retained earnings reflect a company's obligations and impact cash flow.
Non-Cash Transactions
- Purchasing land through a note payable is categorized as a non-cash investing and financing activity in cash flow statements.
Operating Activity Calculations
- Net cash provided by operating activities can be computed using adjustments for depreciation, changes in accounts receivable, inventory, and accounts payable.
- For Hayden, Inc., net cash from operations was $765,000; for Morgan, Inc., it was $823,000.
Impact of Assets and Gains
- The gain from selling equipment is shown as a deduction in the operating activities section.
- Cash-related transactions affecting the income statement are classified under operating activities.
Statement of Cash Flows Purpose
- The statement of cash flows aims to explain changes in a company's cash balance during a specific period.
- It includes three main classifications: operating, investing, and financing activities.
Financial Statements Overview
- Financial statements, including cash flows, do not solely list revenues and expenses but illustrate comprehensive financial changes over time.
- The cash flow statement is essential for assessing a company's liquidity and operational efficiency.
Exempt Transactions
- A write-off of uncollectible accounts does not impact cash flows during a reporting period.
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Description
Test your knowledge of key concepts from Chapter 11 of Financial Accounting. This quiz focuses on cash transactions, operating activities, and their relationships with the balance sheet. Perfect for students preparing for exams or needing a review of essential accounting principles.
