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Exam 15: The Statement of Cash Flows

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Question 61

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Foxworth Company sold plant assets that had accumulated depreciation of $20,000.These assets cost Foxworth $70,000 when purchased 4 years ago.The sale of the assets resulted in a gain for Foxworth of $2,000.The amount of cash reported for this transaction on Foxworth's statement of cash flows is:

A) $70,000 outflow.
B) $52,000 inflow.
C) $72,000 inflow.
D) $2,000 inflow.

E) B) and D)
F) B) and C)

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Question 62

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Investors could use the statement of cash flows to determine whether the company will be able to pay dividends and interest.

A) True
B) False

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Question 63

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The purchase of treasury stock qualifies as a financing activity,but it is not a cash flow.

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Interest Income (assume that cash received is equal to amount reported) -indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Depletion Expense-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

Which of the following statements is correctregarding the statement of cash flows?

How are cash equivalents treated on a statement of cash flows?

Lincoln Company engaged in this transaction: Received 6-month's rent in advance from a tenant in its office building. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Lincoln Company engaged in this transaction: Collected accounts receivable. Indicate which section,if any,the above transaction would appear in,or relate to,on a statement of cash flows.

Use this information to answer the following question. Northbrook Corporation is preparing a statement of cash flows.The following transactions occurred during the year: 1) Sold machinery for $9,000 cash. 2) Purchased a building for $80,000 cash. 3) Issued $70,000 worth of stock to acquire an airplane. 4) Converted long-term bonds by issuing $100,000 worth of stock. 5) Declared and paid a $10,000 cash dividend. -Transaction 5 would be found on the statement of cash flows in the

If the indirect method is used to prepare a statement of cash flows,which of the following would be added to net income to arrive at net cash flows from operating activities?

For 20x5,Sahara Company had average total assets of $520,000,sales of $450,000,net income of $50,000,net cash flows from operating activities of $75,000,dividend payments of $25,000,purchases of plant assets of $60,000,and sales of plant assets of $55,000.Using this information,compute (a)cash flow yield, (b)cash flows to sales, (c)cash flows to assets,and (d)free cash flow.Round amounts to one decimal place.