ACCT 200 Lecture Notes - Lecture 17: Income Statement, Retained Earnings, Financial Statement

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mauvecricket694

30 Nov 2016

School

University of Arizona

Department

Accounting

Course

ACCT 200

Professor

Silverberg

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Document Summary

The balance sheet, income statement, and retained earnings statement provide only limited i(cid:374)fo(cid:396)(cid:373)atio(cid:374) a(cid:271)out a (cid:272)o(cid:373)pa(cid:374)y"s (cid:272)ash flo(cid:449)s. The statement of cash flows reports the cash receipts and cash payments from operation, investing, and financing activities during a period. Helps investors, creditors, and others assess the following: (cid:1005). The e(cid:374)tity"s a(cid:271)ility to ge(cid:374)e(cid:396)ate futu(cid:396)e (cid:272)ash flo(cid:449)s (cid:1006). The e(cid:374)tity"s a(cid:271)ility to pay di(cid:448)ide(cid:374)ds a(cid:374)d (cid:373)eet o(cid:271)ligatio(cid:374)s: the reasons for the difference between net income and net cash provided (used) by operating activities, the cash investing and financing transactions during the period. Classification of cash flows: operating activities: include the cash effects of transactions that create revenues and expenses. Investing activities - changes in investments and long-term assets. Financing activities changes in long-te(cid:396)(cid:373) lia(cid:271)ilities a(cid:374)d sto(cid:272)kholde(cid:396)s" e(cid:395)uity. From sale of investments in debt or equity securities of other entities. From collection of principal on loans to other entities. To purchase investments in debt or equity securities of other entities.

Related Questions

The primary purpose of a statement of cash flows is to provide relevant information about:

a. Difference between net income and associated cash receipts and disbursements.

b. An entity’s ability to generate future positive net cash flows.

c. The cash receipts and disbursements of an entity during a period.

d. An entity’s ability to meet cash operating needs.

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Which of the following is incorrect about the statement of cash flows?

a. It provides information about cash receipts and cash payments of an entity during a period.

b. It provides information about the operating, investing, and financing activities of the business.

c. It reconciles the ending cash account balance to the balance per the bank statement.

d. It is the fourth basic financial statement.

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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.

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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.

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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

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ACCT 200 Lecture Notes - Lecture 17: Income Statement, Retained Earnings, Financial Statement

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