EBK FINANCIAL REPORTING, FINANCIAL STAT
8th Edition
ISBN: 9781337003193
Author: WAHLEN
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 3, Problem 24PC
To determine
Match the companies with the clues given in the common-size statement of cash flows.
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True or False.
15. Balances of nominal accounts are transferred to the Capital account in the SFP. *
34. Statement of Cash Flows explains the observed difference in the cash balance from the beginning to the end of the period. *
35. The bottom line of the Statement of Cash Flows is equivalent to the cash balance presented on the Statement of Financial Position. *
44. The common-size Statement of Comprehensive Income of Company A and Company B shows net income of 10% and 8%, respectively. Company A is more profitable than Company B. *
28. The capital stock account reports the proceeds from the issuance of the stocks. *
39. Vertical analysis compares the balances of one account over different periods.
Which of the following is true of the statement of cash flows?
A
It covers a span of time and is dated the same as the income statement.
B
It shows how the profits or losses of the company were generated.
C
It indicates when long-term debt will mature.
D
It reports on the qualitative behavior of the company's performance.
The major classifications of activities reported in the statements of cash flows are operating, investing, and financing. Classify each of the transactions listed below as:
choose from this( (-)operating activity / (+)investing Activity/ (-) investing activity/ (+) financing activity/ (+) operating activity/ (-) Financing activity ))
- Decrease in accounts receivable during the year.
- Decrease of inventory balanace during the year.
- Decrease of salaries payable during the year.
- Sale of treasury shares.
- Increase of prepaid rent during the year
- Sale of land
- Issurance of Notes payable (long term)
Chapter 3 Solutions
EBK FINANCIAL REPORTING, FINANCIAL STAT
Ch. 3 - Need for a Statement of Cash Flows. The accrual...Ch. 3 - Articulation of the Statement of Cash Flows with...Ch. 3 - Classification of Interest Expense. Under U.S....Ch. 3 - Prob. 4QECh. 3 - Classification of Changes in Short-Term Financing....Ch. 3 - Classification of Cash Flows Related to...Ch. 3 - Treatment of Non-Cash Exchanges. The acquisition...Ch. 3 - Computing Cash Collections from Customers....Ch. 3 - Computing Cash Payments to Suppliers. Lowes...Ch. 3 - Computing Cash Payments for Income Taxes. Visa...
Ch. 3 - Interpreting the Relation between Net Income and...Ch. 3 - Interpreting the Relation between Net Income and...Ch. 3 - Interpreting Relations among Cash Flows from...Ch. 3 - Interpreting Relations among Cash Flows from...Ch. 3 - Interpreting the Statement of Cash Flows. The...Ch. 3 - Interpreting the Statement of Cash Flows. Texas...Ch. 3 - Interpreting the Statement of Cash Flows. Tesla...Ch. 3 - Interpreting the Statement of Cash Flows. Gap Inc....Ch. 3 - Prob. 19PCCh. 3 - Prob. 20PCCh. 3 - Interpreting the Statement of Cash Flows....Ch. 3 - Extracting Performance Trends from the Statement...Ch. 3 - Interpreting a Direct Method Statement of Cash...Ch. 3 - Prob. 24PCCh. 3 - Preparing a Statement of Cash Flows from Balance...Ch. 3 - Prob. 26PCCh. 3 - Preparing a Statement of Cash Flows from Balance...Ch. 3 - Prob. 1AICCh. 3 - Prob. 1BICCh. 3 - Prob. 1CICCh. 3 - Prob. 1DICCh. 3 - Prob. 1EICCh. 3 - Prob. 1FICCh. 3 - Prob. 1GICCh. 3 - Prob. 1HICCh. 3 - Prob. 2AICCh. 3 - Prob. 2BICCh. 3 - Prob. 2CICCh. 3 - Prob. 2DICCh. 3 - Prob. 2EICCh. 3 - Prob. 2FICCh. 3 - Prob. 3IC
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- The major classifications of activities reported in the statements of cash flows are operating, investing, and financing. Classify each of the transactions listed below as: choose from this( (-)operating activity / (+)investing Activity/ (-) investing activity/ (+) financing activity/ (+) operating activity/ (-) Financing activity )) - Decrease in accounts receivable during the year. - Decrease of inventory balanace during the year. - Decrease of salaries payable during the year. - Sale of treasury shares. - Increase of prepaid rent during the year - Sale of land - Issurance of Notes payable (long term) Increase in accounts payable during the year. -depreciation of equipment - Issurance of preference shares - Increase of uneared revenuesduring the year - Purchase of buildings -Net income - Payment of cash dividened - Gain on sale of equipmentarrow_forwardDuring the year, Hepworth Company earned a net income of 61,725. Beginning and ending balances for the year for selected accounts are as follows: There were no financing or investing activities for the year. The above balances reflect all of the adjustments needed to adjust net income to operating cash flows. Required: 1. Prepare a schedule of operating cash flows using the indirect method. 2. Suppose that all the data are used in Requirement 1 except that the ending accounts payable and cash balances are not known. Assume also that you know that the operating cash flow for the year was 20,475. What is the ending balance of accounts payable? 3. CONCEPTUAL CONNECTION Hepworth has an opportunity to buy some equipment that will significantly increase productivity. The equipment costs 25,000. Assuming exactly the same data used for Requirement 1, can Hepworth buy the equipment using this years operating cash flows? If not, what would you suggest be done?arrow_forwardQuinze Seize Corp. reported the following amounts in its statement of financial position at each year-end:a. What is the net cash provided by operating activities?b. What is the net cash used in investing activities?c. What is the net cash provided by financing activities?arrow_forward
- An analyst has calculated a ratio using as the numerator the sum of operating cash fl ow, interest, and taxes and as the denominator the amount of interest. What is this ratio, what does it measure, and what does it indicate? C . Th is ratio is an operating profi tability ratio, measuring the operating cash fl ow generated accounting for taxes and interest and indicating a company’s liquidity.arrow_forwardFor the past two years, Monroe Corporation’s statement of cash flows has shown net cash provided by financing activities. Which of the following choices could explain this result? a. Collection of accounts receivable balances. b. Sales of factory equipment. c. Issuance of long-term debt. d. Receipt of cash dividends from investments in other company’s stock.arrow_forwardSalus Mea Inc., is developing its annual financial statements at December 31, current year. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows: Balance sheet at December 31 Cash Accounts receivable Merchandise inventory Property and equipment Less: Accumulated depreciation Accounts payable Wages payable Note payable, long-term Common stock and additional paid-in capital Retained earnings Income statement for current year Sales Cost of goods sold Depreciation expense Other expenses Net income Additional Data: 1. Bought equipment for cash, $48,900. 2. Paid $14,700 on the long-term note payable. Current Year $ 73,250 15,250 23,450 209,250 (57.450) $263,750 $ 16,500 2,000 56,300 103,950 $5,000 $263.750 $205,000 (123,500) (11,700) (4),000) $26.800 3. Issued new shares of stock for $38,050 cash. 4. Dividends of S650 were declared and paid. 5. Other expenses all relate to wages. 6.…arrow_forward
- The cash flows from (used for) operating activities are reported by the direct method on the statement of cash flows. Determine the following: a. If sales for the current year were $558,800 and accounts receivable decreased by $39,700 during the year, what was the amount of cash received from customers?$fill in the blank 1 b. If income tax expense for the current year was $38,900 and income tax payable decreased by $4,500 during the year, what was the amount of cash paid for income taxes?$fill in the blank 2 c. Briefly explain why the cash received from customers in part (a) is different from sales.Because the customers paid than the amount of sales for the period, cash received from customers sales made on account by $39,700 during the current year.arrow_forwardFinding operating and free cash flows Consider the balance sheets and selected data from the income statement of Keith Corporation that follow. a. Calculate the firm's net operating profit after taxes (NOPAT) for this year. b. Calculate the firm's operating cash flow (OCF) for the year. c. Calculate the firm's free cash flow (FCF) for the year. d. Interpret, compare and contrast your cash flow estimate in parts (b) and (c). Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Assets Cash Marketable securities Accounts receivable Inventories Total current assets Gross fixed assets Less: Accumulated depreciation Net fixed assets Total assets Liabilities and Stockholders' Equity Accounts payable Notes payable Accruals Keith Corporation Balance Sheets Total current liabilities Long-term debt Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity December 31 Income…arrow_forward
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