ACCT 217 Lecture 23: Statement of Cash Flows pt. 1

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coralfrog569

20 Apr 2015

School

University of Calgary

Department

Accounting

Course

ACCT 217

Professor

Darrin Ambrose

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Document Summary

Investing and financing transactions during the period, and effect upon capital structure. Short-term, highly liquid trading investments that are readily converted to cash within a short period of time (usually within three months) Cash receipts and payments are classified into three categories: In order to determine the net cash provided or used by operating activities, we must convert profit from an accrual basis to a cash basis. To do this we must remove all non-cash items that affect profit. Includes relevant noncash current assets and current liabilities on the statement of financial position. Where the related account is an income statement account. Generally includes non-current asset items (e. g. , long-lived investments, property, plant, and equipment) on the statement of financial position. Only factor in transactions where cash is involved. The purchase of a building by accepting a mortgage would not be included in the. Obtaining cash from issuing debt and repaying the amounts borrowed.

Related Questions

Choose the correction answer

15. The statement of cash flowsprovides information to help investors and creditors assess thecash and noncash investing and financing transactions during theperiod.

T F

16. The net increase(decrease) in cash reported on the statement of cash flows shouldreconcile the beginning and ending cash balances reported in thecomparative balance sheets.

T F

17. Anobjective of the statement of cash flows is to

a. disclose changes during the period in all assetand all equity accounts.

b. disclose the change in working capital during theperiod.

c. provide information about the operating,investing, and financing activities of an entity during aperiod.

d. None of these answers are correct.

18. Theprimary purpose of the statement of cash flows is to provideinformation

a. about the operating, investing, and financingactivities of an entity during a period.

b. that is useful in assessing future cash flowprospects.

c. about the cash receipts and cash payments of anentity during a period.

d. about the entity's ability to meet itsobligations and to pay dividends.

19. Cash equivalents are

a. treasury bills, commercial paper, and moneymarket funds purchased with excess cash.

b. investments with original maturities of threemonths or less.

c. readily convertible into known amounts ofcash.

d. All of these answers are correct.

20. Xanthe Corporation had the following transactions occur in thecurrent year:

1. Cash sale of merchandise inventory.

2. Sale of delivery truck at book value.

3. Sale of Xanthe common stock for cash.

4. Issuance of a note payable to a bank forcash.

5. Sale of a security held as anavailable-for-sale investment.

6. Collection of loan receivable.

How many of the above items willappear as a cash inflow from investing activities on a statement ofcash flows for the current year?

a. Five items

b. Four items

c. Three items

d. Two items

erinchimpanzee626

36. The best measure of a company's ability to generate sufficientcash to continue as a going concern is net cash provided by
A) financing activities.
B) investing activities.
C) operating activities.
D) processing activities.

37. Using the indirect method, if equipment is sold at a gain,the
A) sale proceeds received are deducted in the operating activitiessection.
B) sale proceeds received are added in the operating activitiessection.
C) amount of the gain is added in the operating activitiessection.
D) amount of the gain is deducted in the operating activitiessection.

38. The statement of cash flows
A) is prepared instead of an income statement under generallyaccepted accounting principles.
B) is used to assess an entity's ability to pay dividends and meetobligations.
C) is prepared from comparative income statements.
D) reflects earnings per share figures on a cash basis and on anaccrual basis in the body of the statement.

39. In the bottom portion of the statement of cash flowsworksheet,
A) inflows of cash are debits in the reconciling columns.
B) outflows of cash are debits in the reconciling columns.
C) information pertaining to investing and financing activitiesonly is entered.
D) only significant noncash transactions are entered.

40. Which of the following characteristics does not apply to cashequivalents?
A) Short-term
B) Highly-liquid
C) Readily convertible into cash
D) Sensitive to interest rate changes

ceruleanoyster399

The 2016 and 2015 comparative balance sheets and 2016 incomestatement of Outdoor Supply Corp.â follow:

Outdoor Supply Corp.
Comparative Balance Sheets
	December 31,		Increase
	2016	2015	(Decrease)
Current assets:
Cash and cash equivalents	$65,300	$5,000	$60,300
Accounts receivable	47,700	42,500	5,200
Inventories	58,600	57,400	1,200
Prepaid expenses	1,700	4,800	(3,100)
Plant assets:
Land	59,000	21,900	37,100
Equipment, net	53,700	49,400	4,300
Total assets	$286,000	$181,000	$105,000
Current liabilities:
Accounts payable	$35,200	$27,800	$7,400
Salary payable	26,000	15,100	10,900
Other accrued liabilities	20,600	23,700	(3,100)
Long-term liabilities:
Notes payable	65,000	35,000	30,000
Stockholders' equity:
Common stock, no-par	89,100	66,400	22,700
Retained earnings	50,100	13,000	37,100
Total liabilities and stockholders' equity	$286,000	$181,000	$105,000

Outdoor Supply Corp.
Income Statement
Year Ended December 31, 2016
	Revenues:
		Sales revenue		$447,000
	Expenses:
		Cost of goods sold	$187,000
		Salary expense	76,200
		Depreciation expense	17,400
		Other operating expense	49,700
		Interest expense	24,700
		Income tax expense	28,600
		Total expenses		383,600
	Net income			$63,400

Outdoor Supply had no noncash investing and financingtransactions during 2016. During theâ year, there were no sales ofland orâ equipment, no payment of notesâ payable, no retirementsofâ stock, and no treasury stock transactions.

Requirements 1. Prepare the 2016 statement of cashâ flows,formatting operating activities by using the indirect method.

2. How will what you learned in this problem help you evaluateanâ investment?

(a) learn how operating activities, investing activities, andfinancing activities generate cash receipts and cash payments

(b) learn how companies prepare the statement of cash flows inorder to understand the meaning of cash flows from the 3 basiccategories of business activities

(d) none of the above

pucegerbil725

ACCT 217 Lecture 23: Statement of Cash Flows pt. 1

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