5.4 STATEMENT OF CASH FLOWS

Question 1

Conversion of debt to equity

Answer 1

Conversion of debt to equity is disclosed as supplemental information in the statement of cash flows.

Question 2

cash flows per share

Answer 2

As disclosure of the cash flow per share may imply that it would be the amount to be paid in terms of dividends, cash flows per share are not disclosed irrespective of the method used (direct or indirect).

Question 3

Which of the following is not disclosed on the statement of cash flows when prepared under the direct method, either on the face of the statement or in a separate schedule?

Answer 3

A reconciliation of ending retained earnings to cash flows from operating activities is not presented.

Question 4

The decrease in accumulated depreciation .

Answer 4

The decrease in accumulated depreciation caused by a major repair to projection equipment is an outflow for investing activities and would not affect cash provided by operating activities.

Question 5

A stock dividend

Answer 5

A stock dividend is a non-cash transaction that only affects stockholders’ equity accounts. Thus, a stock dividend is not reported on a company’s statement of cash flows, even as a disclosure.