Ch 6 (IFSA) Understanding the Cash Flow Statement Flashcards
___ provides information about a company’s cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company’s balance sheet.
The cash flow statement
The cash flow statement provides information about a company’s ___ and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company’s balance sheet.
cash receipts
The cash flow statement provides information about a company’s cash receipts and ___ during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company’s balance sheet.
cash payments
The cash flow statement provides information about a company’s cash receipts and cash payments during an accounting period, showing how these cash flows link ___ shown on the company’s balance sheet.
the ending cash balance to the beginning balance
The cash flow statement provides information about a company’s cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company’s ___.
balance sheet
___ provided by the cash flow statement contrasts with the accrual-based information from the income statement.
The cash-based information
The cash-based information provided by ___ contrasts with the accrual-based information from the income statement.
the cash flow statement
The cash-based information provided by the cash flow statement contrasts with ___ from the income statement.
the accrual-based information
The cash-based information provided by the cash flow statement contrasts with the accrual-based information from ___.
the income statement
___ reflects cash receipts when collected as opposed to when the revenue was earned.
The cash flow statement
The cash flow statement reflects ___ when collected as opposed to when the revenue was earned.
cash receipts
The cash flow statement reflects cash receipts when ___.
collected as opposed to when the revenue was earned
There are two acceptable formats for reporting ___ (also known as cash flow from operating activities or operating cash flow), defined as the net amount of cash provided from operating activities: the direct and the indirect methods
cash flow from operations
There are two acceptable formats for reporting cash flow from operations (also known as ___ or operating cash flow), defined as the net amount of cash provided from operating activities: the direct and the indirect methods
cash flow from operating activities
There are two acceptable formats for reporting cash flow from operations (also known as cash flow from operating activities or ___), defined as the net amount of cash provided from operating activities: the direct and the indirect methods
operating cash flow
There are two acceptable formats for reporting cash flow from operations (also known as cash flow from operating activities or operating cash flow), defined as ___: the direct and the indirect methods
the net amount of cash provided from operating activities
There are two acceptable formats for reporting cash flow from operations (also known as cash flow from operating activities or operating cash flow), defined as the net amount of cash provided from operating activities: ___
the direct and the indirect methods
___ of presenting operating cash flows shows the specific cash inflows and outflows that result in reported cash flow from operating activities.
The direct method
The direct method of presenting operating cash flows shows ___.
the specific cash inflows and outflows that result in reported cash flow from operating activities
___ eliminates any impact of accruals and shows only cash receipts and cash payments.
The direct method
The direct method eliminates ___ and shows only cash receipts and cash payments.
any impact of accruals
The direct method eliminates any impact of accruals and shows ___.
only cash receipts and cash payments
___ of presenting operating cash flows shows how cash flow from operations can be obtained from reported net income as the result of a series of adjustments.
The indirect method
The indirect method of presenting operating cash flows shows how ___.
cash flow from operations can be obtained from reported net income as the result of a series of adjustments
If revenue reported using accrual accounting is higher than the cash actually collected, the result will be ___.
an increase in accounts receivable
If expenses reported using accrual accounting are lower than cash actually paid, the result will be ___.
a decrease in accounts payable
___ typically relate to the long-term asset section of the balance sheet, and its financing activities typically relate to the equity and long-term debt sections of the balance sheet
A company’s investing activities
A company’s investing activities typically relate to ___ of the balance sheet, and its financing activities typically relate to the equity and long-term debt sections of the balance sheet
the long-term asset section
A company’s investing activities typically relate to the long-term asset section of ___, and its financing activities typically relate to the equity and long-term debt sections of the balance sheet
the balance sheet
A company’s investing activities typically relate to the long-term asset section of the balance sheet, and its ___ typically relate to the equity and long-term debt sections of the balance sheet
financing activities
A company’s investing activities typically relate to the long-term asset section of the balance sheet, and its financing activities typically relate to ___ of the balance sheet
the equity and long-term debt sections
A company’s investing activities typically relate to the long-term asset section of the balance sheet, and its financing activities typically relate to the equity and long-term debt sections of ___
the balance sheet
The preparation of ___ uses data from both the income statement and the comparative balance sheets
the cash flow statement
The preparation of the cash flow statement uses data from both ___ and the comparative balance sheets
the income statement
The preparation of the cash flow statement uses data from both the income statement and ___
the comparative balance sheets
The first step in preparing ___ is to determine the total cash flows from operating activities.
the cash flow statement
The first step in preparing the cash flow statement is to determine ___.
the total cash flows from operating activities
Operating Activities: ___
We first determine how much cash was received from customers, followed by how much cash was paid to suppliers and to employees as well as how much cash was paid for other operating expenses, interest, and income taxes.
Direct Method
Operating Activities: Direct Method
We first determine how much ___, followed by how much cash was paid to suppliers and to employees as well as how much cash was paid for other operating expenses, interest, and income taxes.
cash was received from customers
Operating Activities: Direct Method
We first determine how much cash was received from customers, followed by how much ___ and to employees as well as how much cash was paid for other operating expenses, interest, and income taxes.
cash was paid to suppliers
Operating Activities: Direct Method
We first determine how much cash was received from customers, followed by how much cash was paid to suppliers and to ___ as well as how much cash was paid for other operating expenses, interest, and income taxes.
employees
Operating Activities: Direct Method
We first determine how much cash was received from customers, followed by how much cash was paid to suppliers and to employees as well as how much ___, interest, and income taxes.
cash was paid for other operating expenses
Operating Activities: Direct Method
We first determine how much cash was received from customers, followed by how much cash was paid to suppliers and to employees as well as how much cash was paid for other operating expenses, ___, and income taxes.
interest
We first determine how much cash was received from customers, followed by how much cash was paid to suppliers and to employees as well as how much cash was paid for other operating expenses, interest, and ___.
income taxes
Operating Activities: Direct Method - ___
To determine the cash receipts from customers, it is necessary to adjust the revenue amount by the net change in accounts receivable for the year. If accounts receivable increase during the year, revenue on an accrual basis is higher than cash receipts from customers, and vice versa.
Cash Received from Customers
Operating Activities: Direct Method - Cash Received from Customers
To determine ___, it is necessary to adjust the revenue amount by the net change in accounts receivable for the year. If accounts receivable increase during the year, revenue on an accrual basis is higher than cash receipts from customers, and vice versa.
the cash receipts from customers
Operating Activities: Direct Method - Cash Received from Customers
To determine the cash receipts from customers, it is necessary to adjust ___ amount by the net change in accounts receivable for the year. If accounts receivable increase during the year, revenue on an accrual basis is higher than cash receipts from customers, and vice versa.
the revenue
Operating Activities: Direct Method - Cash Received from Customers
To determine the cash receipts from customers, it is necessary to adjust the revenue amount by ___ in accounts receivable for the year. If accounts receivable increase during the year, revenue on an accrual basis is higher than cash receipts from customers, and vice versa.
the net change
Operating Activities: Direct Method - Cash Received from Customers
To determine the cash receipts from customers, it is necessary to adjust the revenue amount by the net change in ___ for the year. If accounts receivable increase during the year, revenue on an accrual basis is higher than cash receipts from customers, and vice versa.
accounts receivable
Operating Activities: Direct Method - Cash Received from Customers
To determine the cash receipts from customers, it is necessary to adjust the revenue amount by the net change in accounts receivable for the year. If ___ increase during the year, revenue on an accrual basis is higher than cash receipts from customers, and vice versa.
accounts receivable
Operating Activities: Direct Method - Cash Received from Customers
To determine the cash receipts from customers, it is necessary to adjust the revenue amount by the net change in accounts receivable for the year. If accounts receivable increase during the year, ___ is higher than cash receipts from customers, and vice versa.
revenue on an accrual basis
Operating Activities: Direct Method - Cash Received from Customers
To determine the cash receipts from customers, it is necessary to adjust the revenue amount by the net change in accounts receivable for the year. If accounts receivable increase during the year, revenue on an accrual basis is higher than ___, and vice versa.
cash receipts from customers
Operating Activities: Direct Method - Cash Received from Customers
___ $23,598
Less: Increase in accounts receivable (55)
Cash received from customers $23,543
Revenue
Operating Activities: Direct Method - Cash Received from Customers
Revenue ___
Less: Increase in accounts receivable (55)
Cash received from customers $23,543
$23,598
Operating Activities: Direct Method - Cash Received from Customers
Revenue $23,598
___ (55)
Cash received from customers $23,543
Less: Increase in accounts receivable
Operating Activities: Direct Method - Cash Received from Customers
Revenue $23,598
Less: Increase in accounts receivable ___
Cash received from customers $23,543
(55)
Operating Activities: Direct Method - Cash Received from Customers
Revenue $23,598
Less: Increase in accounts receivable (55)
___ $23,543
Cash received from customers
Operating Activities: Direct Method - Cash Received from Customers
Revenue $23,598
Less: Increase in accounts receivable (55)
Cash received from customers ___
$23,543
Operating Activities: Direct Method - Cash Received from Customers
Cash received from customers affects the accounts receivable account as follows:
___ $957
Plus revenue 23,598
Minus cash collected from customers (23,543)
Ending accounts receivable $1,012
Beginning accounts receivable
Operating Activities: Direct Method - Cash Received from Customers
Cash received from customers affects the accounts receivable account as follows:
Beginning accounts receivable ___
Plus revenue 23,598
Minus cash collected from customers (23,543)
Ending accounts receivable $1,012
$957
Operating Activities: Direct Method - Cash Received from Customers
Cash received from customers affects the accounts receivable account as follows:
Beginning accounts receivable $957
___ 23,598
Minus cash collected from customers (23,543)
Ending accounts receivable $1,012
Plus revenue
Operating Activities: Direct Method - Cash Received from Customers
Cash received from customers affects the accounts receivable account as follows:
Beginning accounts receivable $957
Plus revenue ___
Minus cash collected from customers (23,543)
Ending accounts receivable $1,012
23,598
Operating Activities: Direct Method - Cash Received from Customers
Cash received from customers affects the accounts receivable account as follows:
Beginning accounts receivable $957
Plus revenue 23,598
___ (23,543)
Ending accounts receivable $1,012
Minus cash collected from customers
Operating Activities: Direct Method - Cash Received from Customers
Cash received from customers affects the accounts receivable account as follows:
Beginning accounts receivable $957
Plus revenue 23,598
Minus cash collected from customers ___
Ending accounts receivable $1,012
(23,543)
Operating Activities: Direct Method - Cash Received from Customers
Cash received from customers affects the accounts receivable account as follows:
Beginning accounts receivable $957
Plus revenue 23,598
Minus cash collected from customers (23,543)
___ $1,012
Ending accounts receivable
Operating Activities: Direct Method - Cash Received from Customers
Cash received from customers affects the accounts receivable account as follows:
Beginning accounts receivable $957
Plus revenue 23,598
Minus cash collected from customers (23,543)
Ending accounts receivable ___
$1,012
Operating Activities: Direct Method - Cash Received from Customers
The accounts receivable account information can also be presented as follows:
___ $957
Plus revenue 23,598
Minus ending accounts receivable (1,012)
Cash collected from customers $23,543
Beginning accounts receivable
Operating Activities: Direct Method - Cash Received from Customers
The accounts receivable account information can also be presented as follows:
Beginning accounts receivable ___
Plus revenue 23,598
Minus ending accounts receivable (1,012)
Cash collected from customers $23,543
$957
Operating Activities: Direct Method - Cash Received from Customers
The accounts receivable account information can also be presented as follows:
Beginning accounts receivable $957
___ 23,598
Minus ending accounts receivable (1,012)
Cash collected from customers $23,543
Plus revenue
Operating Activities: Direct Method - Cash Received from Customers
The accounts receivable account information can also be presented as follows:
Beginning accounts receivable $957
Plus revenue ___
Minus ending accounts receivable (1,012)
Cash collected from customers $23,543
23,598
Operating Activities: Direct Method - Cash Received from Customers
The accounts receivable account information can also be presented as follows:
Beginning accounts receivable $957
Plus revenue 23,598
___ (1,012)
Cash collected from customers $23,543
Minus ending accounts receivable
Operating Activities: Direct Method - Cash Received from Customers
The accounts receivable account information can also be presented as follows:
Beginning accounts receivable $957
Plus revenue 23,598
Minus ending accounts receivable ___
Cash collected from customers $23,543
(1,012)
Operating Activities: Direct Method - Cash Received from Customers
The accounts receivable account information can also be presented as follows:
Beginning accounts receivable $957
Plus revenue 23,598
Minus ending accounts receivable (1,012)
___ $23,543
Cash collected from customers
Operating Activities: Direct Method - Cash Received from Customers
The accounts receivable account information can also be presented as follows:
Beginning accounts receivable $957
Plus revenue 23,598
Minus ending accounts receivable (1,012)
Cash collected from customers ___
$23,543
Computing Cash Received from Customers
Blue Bayou, an advertising company, reported revenues of $50 million, total expenses of $35 million, and net income of $15 million in the most recent year. If accounts receivable decreased by $12 million, how much cash did the company receive from customers?
A. $62 million
B. $50 million
C. $38 million
D. $15 million
A is correct.
Revenues of $50 million plus the decrease in accounts receivable of $12 million equals $62 million cash received from customers. The decrease in accounts receivable means that the company received more in cash than the amount of revenue it reported.
Operating Activities: Direct Method - ___
Cost of goods sold $11,456
Plus: Increase in inventory 707
Equals purchases from suppliers $12,163
Less: Increase in accounts payable (263)
Cash paid to suppliers $11,900
Cash Paid to Suppliers
Operating Activities: Direct Method - Cash Paid to Suppliers
___ $11,456
Plus: Increase in inventory 707
Equals purchases from suppliers $12,163
Less: Increase in accounts payable (263)
Cash paid to suppliers $11,900
Cost of goods sold
Operating Activities: Direct Method - Cash Paid to Suppliers
Cost of goods sold ___
Plus: Increase in inventory 707
Equals purchases from suppliers $12,163
Less: Increase in accounts payable (263)
Cash paid to suppliers $11,900
$11,456
Operating Activities: Direct Method - Cash Paid to Suppliers
Cost of goods sold $11,456
___ 707
Equals purchases from suppliers $12,163
Less: Increase in accounts payable (263)
Cash paid to suppliers $11,900
Plus: Increase in inventory
Operating Activities: Direct Method - Cash Paid to Suppliers
Cost of goods sold $11,456
Plus: Increase in inventory ___
Equals purchases from suppliers $12,163
Less: Increase in accounts payable (263)
Cash paid to suppliers $11,900
707
Operating Activities: Direct Method - Cash Paid to Suppliers
Cost of goods sold $11,456
Plus: Increase in inventory 707
___ $12,163
Less: Increase in accounts payable (263)
Cash paid to suppliers $11,900
Equals purchases from suppliers
Operating Activities: Direct Method - Cash Paid to Suppliers
Cost of goods sold $11,456
Plus: Increase in inventory 707
Equals purchases from suppliers ___
Less: Increase in accounts payable (263)
Cash paid to suppliers $11,900
$12,163
Operating Activities: Direct Method - Cash Paid to Suppliers
Cost of goods sold $11,456
Plus: Increase in inventory 707
Equals purchases from suppliers $12,163
___ (263)
Cash paid to suppliers $11,900
Less: Increase in accounts payable
Operating Activities: Direct Method - Cash Paid to Suppliers
Cost of goods sold $11,456
Plus: Increase in inventory 707
Equals purchases from suppliers $12,163
Less: Increase in accounts payable ___
Cash paid to suppliers $11,900
(263)
Operating Activities: Direct Method - Cash Paid to Suppliers
Cost of goods sold $11,456
Plus: Increase in inventory 707
Equals purchases from suppliers $12,163
Less: Increase in accounts payable (263)
___ $11,900
Cash paid to suppliers
Operating Activities: Direct Method - Cash Paid to Suppliers
Cost of goods sold $11,456
Plus: Increase in inventory 707
Equals purchases from suppliers $12,163
Less: Increase in accounts payable (263)
Cash paid to suppliers ___
$11,900
Operating Activities: Direct Method - ___
To determine purchases from suppliers, cost of goods sold is adjusted for the change in inventory. If inventory increased during the year, then purchases during the year exceeded cost of goods sold, and vice versa
Cash Paid to Suppliers
Operating Activities: Direct Method - Cash Paid to Suppliers
To determine ___, cost of goods sold is adjusted for the change in inventory. If inventory increased during the year, then purchases during the year exceeded cost of goods sold, and vice versa
purchases from suppliers
Operating Activities: Direct Method - Cash Paid to Suppliers
To determine purchases from suppliers, ___ is adjusted for the change in inventory. If inventory increased during the year, then purchases during the year exceeded cost of goods sold, and vice versa
cost of goods sold
Operating Activities: Direct Method - Cash Paid to Suppliers
To determine purchases from suppliers, cost of goods sold is adjusted for ___. If inventory increased during the year, then purchases during the year exceeded cost of goods sold, and vice versa
the change in inventory
Operating Activities: Direct Method - Cash Paid to Suppliers
To determine purchases from suppliers, cost of goods sold is adjusted for the change in inventory. If ___ increased during the year, then purchases during the year exceeded cost of goods sold, and vice versa
inventory
Operating Activities: Direct Method - Cash Paid to Suppliers
To determine purchases from suppliers, cost of goods sold is adjusted for the change in inventory. If inventory increased during the year, then ___ during the year exceeded cost of goods sold, and vice versa
purchases
Operating Activities: Direct Method - Cash Paid to Suppliers
To determine purchases from suppliers, cost of goods sold is adjusted for the change in inventory. If inventory increased during the year, then purchases during the year exceeded ___, and vice versa
cost of goods sold
Operating Activities: Direct Method - Cash Paid to Suppliers
___ affects the inventory account, as shown below:
Beginning inventory $3,277
Plus purchases 12,163
Minus cost of goods sold (11,456)
Ending inventory $3,984
Purchases from suppliers
Operating Activities: Direct Method - Cash Paid to Suppliers
Purchases from suppliers affects the inventory account, as shown below:
___ $3,277
Plus purchases 12,163
Minus cost of goods sold (11,456)
Ending inventory $3,984
Beginning inventory
Operating Activities: Direct Method - Cash Paid to Suppliers
Purchases from suppliers affects the inventory account, as shown below:
Beginning inventory ___
Plus purchases 12,163
Minus cost of goods sold (11,456)
Ending inventory $3,984
$3,277
Operating Activities: Direct Method - Cash Paid to Suppliers
Purchases from suppliers affects the inventory account, as shown below:
Beginning inventory $3,277
___ 12,163
Minus cost of goods sold (11,456)
Ending inventory $3,984
Plus purchases
Operating Activities: Direct Method - Cash Paid to Suppliers
Purchases from suppliers affects the inventory account, as shown below:
Beginning inventory $3,277
Plus purchases ___
Minus cost of goods sold (11,456)
Ending inventory $3,984
12,163
Operating Activities: Direct Method - Cash Paid to Suppliers
Purchases from suppliers affects the inventory account, as shown below:
Beginning inventory $3,277
Plus purchases 12,163
___ (11,456)
Ending inventory $3,984
Minus cost of goods sold
Operating Activities: Direct Method - Cash Paid to Suppliers
Purchases from suppliers affects the inventory account, as shown below:
Beginning inventory $3,277
Plus purchases 12,163
Minus cost of goods sold ___
Ending inventory $3,984
(11,456)
Operating Activities: Direct Method - Cash Paid to Suppliers
Purchases from suppliers affects the inventory account, as shown below:
Beginning inventory $3,277
Plus purchases 12,163
Minus cost of goods sold (11,456)
___ $3,984
Ending inventory
Operating Activities: Direct Method - Cash Paid to Suppliers
Purchases from suppliers affects the inventory account, as shown below:
Beginning inventory $3,277
Plus purchases 12,163
Minus cost of goods sold (11,456)
Ending inventory ___
$3,984
Operating Activities: Direct Method - Cash Paid to Suppliers
Once ___ have been determined, cash paid to suppliers can be calculated by adjusting purchases for the change in accounts payable. If the company made all purchases for cash, then accounts payable would not change and cash outflows would equal purchases. If accounts payable increased during the year, then purchases on an accrual basis are higher than they are on a cash basis, and vice versa.
purchases
Operating Activities: Direct Method - Cash Paid to Suppliers
Once purchases have been determined, ___ can be calculated by adjusting purchases for the change in accounts payable. If the company made all purchases for cash, then accounts payable would not change and cash outflows would equal purchases. If accounts payable increased during the year, then purchases on an accrual basis are higher than they are on a cash basis, and vice versa.
cash paid to suppliers
Operating Activities: Direct Method - Cash Paid to Suppliers
Once purchases have been determined, cash paid to suppliers can be calculated by adjusting ___ for the change in accounts payable. If the company made all purchases for cash, then accounts payable would not change and cash outflows would equal purchases. If accounts payable increased during the year, then purchases on an accrual basis are higher than they are on a cash basis, and vice versa.
purchases
Operating Activities: Direct Method - Cash Paid to Suppliers
Once purchases have been determined, cash paid to suppliers can be calculated by adjusting purchases for the change in ___. If the company made all purchases for cash, then accounts payable would not change and cash outflows would equal purchases. If accounts payable increased during the year, then purchases on an accrual basis are higher than they are on a cash basis, and vice versa.
accounts payable
Operating Activities: Direct Method - Cash Paid to Suppliers
Once purchases have been determined, cash paid to suppliers can be calculated by adjusting purchases for the change in accounts payable. If the company made all purchases for cash, then ___ would not change and cash outflows would equal purchases. If accounts payable increased during the year, then purchases on an accrual basis are higher than they are on a cash basis, and vice versa.
accounts payable
Operating Activities: Direct Method - Cash Paid to Suppliers
Once purchases have been determined, cash paid to suppliers can be calculated by adjusting purchases for the change in accounts payable. If the company made all purchases for cash, then accounts payable would not change and ___ would equal purchases. If accounts payable increased during the year, then purchases on an accrual basis are higher than they are on a cash basis, and vice versa.
cash outflows
Operating Activities: Direct Method - Cash Paid to Suppliers
Once purchases have been determined, cash paid to suppliers can be calculated by adjusting purchases for the change in accounts payable. If the company made all purchases for cash, then accounts payable would not change and cash outflows would equal ___. If accounts payable increased during the year, then purchases on an accrual basis are higher than they are on a cash basis, and vice versa.
purchases
Operating Activities: Direct Method - Cash Paid to Suppliers
Once purchases have been determined, cash paid to suppliers can be calculated by adjusting purchases for the change in accounts payable. If the company made all purchases for cash, then accounts payable would not change and cash outflows would equal purchases. If ___ increased during the year, then purchases on an accrual basis are higher than they are on a cash basis, and vice versa.
accounts payable
Operating Activities: Direct Method - Cash Paid to Suppliers
Once purchases have been determined, cash paid to suppliers can be calculated by adjusting purchases for the change in accounts payable. If the company made all purchases for cash, then accounts payable would not change and cash outflows would equal purchases. If accounts payable increased during the year, then ___ are higher than they are on a cash basis, and vice versa.
purchases on an accrual basis
Operating Activities: Direct Method - Cash Paid to Suppliers
Once purchases have been determined, cash paid to suppliers can be calculated by adjusting purchases for the change in accounts payable. If the company made all purchases for cash, then accounts payable would not change and cash outflows would equal purchases. If accounts payable increased during the year, then purchases on an accrual basis are higher than they are on ___, and vice versa.
a cash basis
Operating Activities: Direct Method - Cash Paid to Suppliers
___ $12,163
Less: Increase in accounts payable (263)
Cash paid to suppliers $11,900
Purchases from suppliers
Operating Activities: Direct Method - Cash Paid to Suppliers
Purchases from suppliers ___
Less: Increase in accounts payable (263)
Cash paid to suppliers $11,900
$12,163
Operating Activities: Direct Method - Cash Paid to Suppliers
Purchases from suppliers $12,163
___ (263)
Cash paid to suppliers $11,900
Less: Increase in accounts payable
Operating Activities: Direct Method - Cash Paid to Suppliers
Purchases from suppliers $12,163
Less: Increase in accounts payable ___
Cash paid to suppliers $11,900
(263)
Operating Activities: Direct Method - Cash Paid to Suppliers
Purchases from suppliers $12,163
Less: Increase in accounts payable (263)
___ $11,900
Cash paid to suppliers
Operating Activities: Direct Method - Cash Paid to Suppliers
Purchases from suppliers $12,163
Less: Increase in accounts payable (263)
Cash paid to suppliers ___
$11,900
Operating Activities: Direct Method - Cash Paid to Suppliers
The amount of cash paid to suppliers is reflected in the accounts payable account, as shown below:
___ $3,325
Plus purchases 12,163
Minus cash paid to suppliers (11,900)
Ending accounts payable $3,588
Beginning accounts payable
Operating Activities: Direct Method - Cash Paid to Suppliers
The amount of cash paid to suppliers is reflected in the accounts payable account, as shown below:
Beginning accounts payable ___
Plus purchases 12,163
Minus cash paid to suppliers (11,900)
Ending accounts payable $3,588
$3,325
Operating Activities: Direct Method - Cash Paid to Suppliers
The amount of cash paid to suppliers is reflected in the accounts payable account, as shown below:
Beginning accounts payable $3,325
___ 12,163
Minus cash paid to suppliers (11,900)
Ending accounts payable $3,588
Plus purchases
Operating Activities: Direct Method - Cash Paid to Suppliers
The amount of cash paid to suppliers is reflected in the accounts payable account, as shown below:
Beginning accounts payable $3,325
Plus purchases ___
Minus cash paid to suppliers (11,900)
Ending accounts payable $3,588
12,163
Operating Activities: Direct Method - Cash Paid to Suppliers
The amount of cash paid to suppliers is reflected in the accounts payable account, as shown below:
Beginning accounts payable $3,325
Plus purchases 12,163
___ (11,900)
Ending accounts payable $3,588
Minus cash paid to suppliers
Operating Activities: Direct Method - Cash Paid to Suppliers
The amount of cash paid to suppliers is reflected in the accounts payable account, as shown below:
Beginning accounts payable $3,325
Plus purchases 12,163
Minus cash paid to suppliers ___
Ending accounts payable $3,588
(11,900)
Operating Activities: Direct Method - Cash Paid to Suppliers
The amount of cash paid to suppliers is reflected in the accounts payable account, as shown below:
Beginning accounts payable $3,325
Plus purchases 12,163
Minus cash paid to suppliers (11,900)
___ $3,588
Ending accounts payable
Operating Activities: Direct Method - Cash Paid to Suppliers
The amount of cash paid to suppliers is reflected in the accounts payable account, as shown below:
Beginning accounts payable $3,325
Plus purchases 12,163
Minus cash paid to suppliers (11,900)
Ending accounts payable ___
$3,588
Orange Beverages Plc., a manufacturer of tropical drinks, reported cost of goods sold
for the year of $100 million. Total assets increased by $55 million, but inventory
declined by $6 million. Total liabilities increased by $45 million, but accounts payable
decreased by $2 million. How much cash did the company pay to its suppliers during
the year?
A. $110 million
B. $108 million
C. $104 million
D. $96 million
Solution. D is correct.
Cost of goods sold of $100 million less the decrease in inventory of $6 million equals purchases from suppliers of $94 million. The decrease in accounts payable of $2 million means that the company paid $96 million in cash ($94 million plus $2 million).
Operating Activities: Direct Method - Cash Paid to Employees
To determine ___, it is necessary to adjust salary and wage expense by the net change in salary and wage payable for the year. If salary and wage payable increased during the year, then salary and wage expense on an accrual basis is higher than the amount of cash paid for this expense, and vice versa.
the cash paid to employees
Operating Activities: Direct Method - Cash Paid to Employees
To determine the cash paid to employees, it is necessary to adjust ___ by the net change in salary and wage payable for the year. If salary and wage payable increased during the year, then salary and wage expense on an accrual basis is higher than the amount of cash paid for this expense, and vice versa.
salary and wage expense
Operating Activities: Direct Method - Cash Paid to Employees
To determine the cash paid to employees, it is necessary to adjust salary and wage expense by ___ for the year. If salary and wage payable increased during the year, then salary and wage expense on an accrual basis is higher than the amount of cash paid for this expense, and vice versa.
the net change in salary and wage payable
Operating Activities: Direct Method - Cash Paid to Employees
To determine the cash paid to employees, it is necessary to adjust salary and wage expense by the net change in salary and wage payable for the year. If ___ increased during the year, then salary and wage expense on an accrual basis is higher than the amount of cash paid for this expense, and vice versa.
salary and wage payable
Operating Activities: Direct Method - Cash Paid to Employees
To determine the cash paid to employees, it is necessary to adjust salary and wage expense by the net change in salary and wage payable for the year. If salary and wage payable increased during the year, then ___ on an accrual basis is higher than the amount of cash paid for this expense, and vice versa.
salary and wage expense
Operating Activities: Direct Method - Cash Paid to Employees
To determine the cash paid to employees, it is necessary to adjust salary and wage expense by the net change in salary and wage payable for the year. If salary and wage payable increased during the year, then salary and wage expense on ___ is higher than the amount of cash paid for this expense, and vice versa.
an accrual basis
Operating Activities: Direct Method - Cash Paid to Employees
To determine the cash paid to employees, it is necessary to adjust salary and wage expense by the net change in salary and wage payable for the year. If salary and wage payable increased during the year, then salary and wage expense on an accrual basis is higher than the amount of ___ paid for this expense, and vice versa.
cash
Operating Activities: Direct Method - Cash Paid to Employees
___ $4,123
Less: Increase in salary and wage payable (10)
Cash paid to employees $4,113
Salary and wage expense
Operating Activities: Direct Method - Cash Paid to Employees
Salary and wage expense ___
Less: Increase in salary and wage payable (10)
Cash paid to employees $4,113
$4,123
Operating Activities: Direct Method - Cash Paid to Employees
Salary and wage expense $4,123
___ (10)
Cash paid to employees $4,113
Less: Increase in salary and wage payable
Operating Activities: Direct Method - Cash Paid to Employees
Salary and wage expense $4,123
Less: Increase in salary and wage payable ___
Cash paid to employees $4,113
(10)
Operating Activities: Direct Method - Cash Paid to Employees
Salary and wage expense $4,123
Less: Increase in salary and wage payable (10)
___ $4,113
Cash paid to employees
Operating Activities: Direct Method - Cash Paid to Employees
Salary and wage expense $4,123
Less: Increase in salary and wage payable (10)
Cash paid to employees ___
$4,113
Operating Activities: Direct Method - Cash Paid to Employees
The amount of cash paid to employees is reflected in the salary and wage payable account, as shown below:
___ $75
Plus salary and wage expense 4,123
Minus cash paid to employees (4,113)
Ending salary and wages payable $85
Beginning salary and wages payable
Operating Activities: Direct Method - Cash Paid to Employees
The amount of cash paid to employees is reflected in the salary and wage payable account, as shown below:
Beginning salary and wages payable ___
Plus salary and wage expense 4,123
Minus cash paid to employees (4,113)
Ending salary and wages payable $85
$75
Operating Activities: Direct Method - Cash Paid to Employees
The amount of cash paid to employees is reflected in the salary and wage payable account, as shown below:
Beginning salary and wages payable $75
___ 4,123
Minus cash paid to employees (4,113)
Ending salary and wages payable $85
Plus salary and wage expense
Operating Activities: Direct Method - Cash Paid to Employees
The amount of cash paid to employees is reflected in the salary and wage payable account, as shown below:
Beginning salary and wages payable $75
Plus salary and wage expense ___
Minus cash paid to employees (4,113)
Ending salary and wages payable $85
4,123
Operating Activities: Direct Method - Cash Paid to Employees
The amount of cash paid to employees is reflected in the salary and wage payable account, as shown below:
Beginning salary and wages payable $75
Plus salary and wage expense 4,123
___ (4,113)
Ending salary and wages payable $85
Minus cash paid to employees
Operating Activities: Direct Method - Cash Paid to Employees
The amount of cash paid to employees is reflected in the salary and wage payable account, as shown below:
Beginning salary and wages payable $75
Plus salary and wage expense 4,123
Minus cash paid to employees ___
Ending salary and wages payable $85
(4,113)
Operating Activities: Direct Method - Cash Paid to Employees
The amount of cash paid to employees is reflected in the salary and wage payable account, as shown below:
Beginning salary and wages payable $75
Plus salary and wage expense 4,123
Minus cash paid to employees (4,113)
___ $85
Ending salary and wages payable
Operating Activities: Direct Method - Cash Paid to Employees
The amount of cash paid to employees is reflected in the salary and wage payable account, as shown below:
Beginning salary and wages payable $75
Plus salary and wage expense 4,123
Minus cash paid to employees (4,113)
Ending salary and wages payable ___
$85
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
To determine the cash paid for other operating expenses, it is necessary to adjust ___ on the income statement by the net changes in prepaid expenses and accrued expense liabilities for the year. If prepaid expenses increased during the year, other operating expenses on a cash basis were higher than on an accrual basis, and vice versa.
the other operating expenses amount
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
To determine the cash paid for other operating expenses, it is necessary to adjust the other operating expenses amount on the income statement by ___ in prepaid expenses and accrued expense liabilities for the year. If prepaid expenses increased during the year, other operating expenses on a cash basis were higher than on an accrual basis, and vice versa.
the net changes
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
To determine the cash paid for other operating expenses, it is necessary to adjust the other operating expenses amount on the income statement by the net changes in ___ and accrued expense liabilities for the year. If prepaid expenses increased during the year, other operating expenses on a cash basis were higher than on an accrual basis, and vice versa.
prepaid expenses
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
To determine the cash paid for other operating expenses, it is necessary to adjust the other operating expenses amount on the income statement by the net changes in prepaid expenses and ___ for the year. If prepaid expenses increased during the year, other operating expenses on a cash basis were higher than on an accrual basis, and vice versa.
accrued expense liabilities
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
To determine the cash paid for other operating expenses, it is necessary to adjust the other operating expenses amount on the income statement by the net changes in prepaid expenses and accrued expense liabilities for the year. If ___ increased during the year, other operating expenses on a cash basis were higher than on an accrual basis, and vice versa.
prepaid expenses
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
To determine the cash paid for other operating expenses, it is necessary to adjust the other operating expenses amount on the income statement by the net changes in prepaid expenses and accrued expense liabilities for the year. If prepaid expenses increased during the year, ___ on a cash basis were higher than on an accrual basis, and vice versa.
other operating expenses
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
To determine the cash paid for other operating expenses, it is necessary to adjust the other operating expenses amount on the income statement by the net changes in prepaid expenses and accrued expense liabilities for the year. If prepaid expenses increased during the year, other operating expenses on a ___ basis were higher than on an accrual basis, and vice versa.
cash
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
To determine the cash paid for other operating expenses, it is necessary to adjust the other operating expenses amount on the income statement by the net changes in prepaid expenses and accrued expense liabilities for the year. If prepaid expenses increased during the year, other operating expenses on a cash basis were higher than on an ___ basis, and vice versa.
accrual
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
___ $3,577
Less: Decrease in prepaid expenses (23)
Less: Increase in other accrued liabilities (22)
Cash paid for other operating expenses $3,532
Other operating expenses
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
Other operating expenses ___
Less: Decrease in prepaid expenses (23)
Less: Increase in other accrued liabilities (22)
Cash paid for other operating expenses $3,532
$3,577
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
Other operating expenses $3,577
___ (23)
Less: Increase in other accrued liabilities (22)
Cash paid for other operating expenses $3,532
Less: Decrease in prepaid expenses
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
Other operating expenses $3,577
Less: Decrease in prepaid expenses ___
Less: Increase in other accrued liabilities (22)
Cash paid for other operating expenses $3,532
(23)
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
Other operating expenses $3,577
Less: Decrease in prepaid expenses (23)
___ (22)
Cash paid for other operating expenses $3,532
Less: Increase in other accrued liabilities
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
Other operating expenses $3,577
Less: Decrease in prepaid expenses (23)
Less: Increase in other accrued liabilities ___
Cash paid for other operating expenses $3,532
(22)
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
Other operating expenses $3,577
Less: Decrease in prepaid expenses (23)
Less: Increase in other accrued liabilities (22)
___ $3,532
Cash paid for other operating expenses
Operating Activities: Direct Method - Cash Paid for Other Operating Expenses
Other operating expenses $3,577
Less: Decrease in prepaid expenses (23)
Less: Increase in other accrued liabilities (22)
Cash paid for other operating expenses ___
$3,532
Black Ice, a sportswear manufacturer, reported other operating expenses of $30 million. Prepaid insurance expense increased by $4 million, and accrued utilities payable decreased by $7 million. Insurance and utilities are the only two components of other operating expenses. How much cash did the company pay in other operating expenses?
A. $41 million
B. $33 million
C. $27 million
D. $19 million
Solution. A is correct.
Other operating expenses of $30 million plus the increase in prepaid insurance expense of $4 million plus the decrease in accrued utilities payable of $7 million equals $41 million.
Operating Activities: Direct Method - Cash Paid for Interest
The company is either subject to ___, which requires that interest expense be included in operating cash flows, or it is subject to IFRS, which gives companies the option to treat interest expense in this manner.
U.S. GAAP
Operating Activities: Direct Method - Cash Paid for Interest
The company is either subject to U.S. GAAP, which requires that ___, or it is subject to IFRS, which gives companies the option to treat interest expense in this manner.
interest expense be included in operating cash flows
Operating Activities: Direct Method - Cash Paid for Interest
The company is either subject to U.S. GAAP, which requires that interest expense be included in operating cash flows, or it is subject to ___, which gives companies the option to treat interest expense in this manner.
IFRS
Operating Activities: Direct Method - Cash Paid for Interest
The company is either subject to U.S. GAAP, which requires that interest expense be included in operating cash flows, or it is subject to IFRS, which gives companies ___.
the option to treat interest expense in this manner
Operating Activities: Direct Method - Cash Paid for Interest
To determine ___, it is necessary to adjust interest expense by the net change in interest payable for the year. If interest payable increases during the year, then interest expense on an accrual basis is higher than the amount of cash paid for interest, and vice versa.
the cash paid for interest
Operating Activities: Direct Method - Cash Paid for Interest
To determine the cash paid for interest, it is necessary to adjust ___ by the net change in interest payable for the year. If interest payable increases during the year, then interest expense on an accrual basis is higher than the amount of cash paid for interest, and vice versa.
interest expense
Operating Activities: Direct Method - Cash Paid for Interest
To determine the cash paid for interest, it is necessary to adjust interest expense by the ___ in interest payable for the year. If interest payable increases during the year, then interest expense on an accrual basis is higher than the amount of cash paid for interest, and vice versa.
net change
Operating Activities: Direct Method - Cash Paid for Interest
To determine the cash paid for interest, it is necessary to adjust interest expense by the net change in ___ for the year. If interest payable increases during the year, then interest expense on an accrual basis is higher than the amount of cash paid for interest, and vice versa.
interest payable
Operating Activities: Direct Method - Cash Paid for Interest
To determine the cash paid for interest, it is necessary to adjust interest expense by the net change in interest payable for the year. If ___ increases during the year, then interest expense on an accrual basis is higher than the amount of cash paid for interest, and vice versa.
interest payable
Operating Activities: Direct Method - Cash Paid for Interest
To determine the cash paid for interest, it is necessary to adjust interest expense by the net change in interest payable for the year. If interest payable increases during the year, then ___ on an accrual basis is higher than the amount of cash paid for interest, and vice versa.
interest expense
To determine the cash paid for interest, it is necessary to adjust interest expense by the net change in interest payable for the year. If interest payable increases during the year, then interest expense on an ___ basis is higher than the amount of cash paid for interest, and vice versa.
accrual
To determine the cash paid for interest, it is necessary to adjust interest expense by the net change in interest payable for the year. If interest payable increases during the year, then interest expense on an accrual basis is higher than the amount of ___ paid for interest, and vice versa.
cash
Operating Activities: Direct Method - Cash Paid for Interest
___ $246
Plus: Decrease in interest payable 12
Cash paid for interest $258
Interest expense
Operating Activities: Direct Method - Cash Paid for Interest
Interest expense ___
Plus: Decrease in interest payable 12
Cash paid for interest $258
$246
Operating Activities: Direct Method - Cash Paid for Interest
Interest expense $246
___ 12
Cash paid for interest $258
Plus: Decrease in interest payable
Operating Activities: Direct Method - Cash Paid for Interest
Interest expense $246
Plus: Decrease in interest payable ___
Cash paid for interest $258
12
Operating Activities: Direct Method - Cash Paid for Interest
Interest expense $246
Plus: Decrease in interest payable 12
___ $258
Cash paid for interest
Operating Activities: Direct Method - Cash Paid for Interest
Interest expense $246
Plus: Decrease in interest payable 12
Cash paid for interest ___
$258
Operating Activities: Direct Method - Cash Paid for Interest
Cash paid for interest may also be determined by an analysis of the interest payable account, as shown below:
___ $74
Plus interest expense 246
Minus cash paid for interest (258)
Ending interest payable $62
Beginning interest payable
Operating Activities: Direct Method - Cash Paid for Interest
Cash paid for interest may also be determined by an analysis of the interest payable account, as shown below:
Beginning interest payable ___
Plus interest expense 246
Minus cash paid for interest (258)
Ending interest payable $62
$74
Operating Activities: Direct Method - Cash Paid for Interest
Cash paid for interest may also be determined by an analysis of the interest payable account, as shown below:
Beginning interest payable $74
___ 246
Minus cash paid for interest (258)
Ending interest payable $62
Plus interest expense
Operating Activities: Direct Method - Cash Paid for Interest
Cash paid for interest may also be determined by an analysis of the interest payable account, as shown below:
Beginning interest payable $74
Plus interest expense ___
Minus cash paid for interest (258)
Ending interest payable $62
246
Operating Activities: Direct Method - Cash Paid for Interest
Cash paid for interest may also be determined by an analysis of the interest payable account, as shown below:
Beginning interest payable $74
Plus interest expense 246
___ (258)
Ending interest payable $62
Minus cash paid for interest
Operating Activities: Direct Method - Cash Paid for Interest
Cash paid for interest may also be determined by an analysis of the interest payable account, as shown below:
Beginning interest payable $74
Plus interest expense 246
Minus cash paid for interest ___
Ending interest payable $62
(258)
Operating Activities: Direct Method - Cash Paid for Interest
Cash paid for interest may also be determined by an analysis of the interest payable account, as shown below:
Beginning interest payable $74
Plus interest expense 246
Minus cash paid for interest (258)
___ $62
Ending interest payable
Operating Activities: Direct Method - Cash Paid for Interest
Cash paid for interest may also be determined by an analysis of the interest payable account, as shown below:
Beginning interest payable $74
Plus interest expense 246
Minus cash paid for interest (258)
Ending interest payable ___
$62
Operating Activities: Direct Method - Cash Paid for Income Taxes
To determine ___, it is necessary to adjust the income tax expense amount on the income statement by the net changes in taxes receivable, taxes payable, and deferred income taxes for the year. If taxes receivable or deferred tax assets increase during the year, income taxes on a cash basis will be higher than on an accrual basis, and vice versa.
the cash paid for income taxes
Operating Activities: Direct Method - Cash Paid for Income Taxes
To determine the cash paid for income taxes, it is necessary to adjust ___ on the income statement by the net changes in taxes receivable, taxes payable, and deferred income taxes for the year. If taxes receivable or deferred tax assets increase during the year, income taxes on a cash basis will be higher than on an accrual basis, and vice versa.
the income tax expense amount
Operating Activities: Direct Method - Cash Paid for Income Taxes
To determine the cash paid for income taxes, it is necessary to adjust the income tax expense amount on the income statement by ___ in taxes receivable, taxes payable, and deferred income taxes for the year. If taxes receivable or deferred tax assets increase during the year, income taxes on a cash basis will be higher than on an accrual basis, and vice versa.
the net changes
Operating Activities: Direct Method - Cash Paid for Income Taxes
To determine the cash paid for income taxes, it is necessary to adjust the income tax expense amount on the income statement by the net changes in ___, taxes payable, and deferred income taxes for the year. If taxes receivable or deferred tax assets increase during the year, income taxes on a cash basis will be higher than on an accrual basis, and vice versa.
taxes receivable
Operating Activities: Direct Method - Cash Paid for Income Taxes
To determine the cash paid for income taxes, it is necessary to adjust the income tax expense amount on the income statement by the net changes in taxes receivable, ___, and deferred income taxes for the year. If taxes receivable or deferred tax assets increase during the year, income taxes on a cash basis will be higher than on an accrual basis, and vice versa.
taxes payable
Operating Activities: Direct Method - Cash Paid for Income Taxes
To determine the cash paid for income taxes, it is necessary to adjust the income tax expense amount on the income statement by the net changes in taxes receivable, taxes payable, and ___ for the year. If taxes receivable or deferred tax assets increase during the year, income taxes on a cash basis will be higher than on an accrual basis, and vice versa.
deferred income taxes
Operating Activities: Direct Method - Cash Paid for Income Taxes
To determine the cash paid for income taxes, it is necessary to adjust the income tax expense amount on the income statement by the net changes in taxes receivable, taxes payable, and deferred income taxes for the year. If ___ or deferred tax assets increase during the year, income taxes on a cash basis will be higher than on an accrual basis, and vice versa.
taxes receivable
Operating Activities: Direct Method - Cash Paid for Income Taxes
To determine the cash paid for income taxes, it is necessary to adjust the income tax expense amount on the income statement by the net changes in taxes receivable, taxes payable, and deferred income taxes for the year. If taxes receivable or ___ increase during the year, income taxes on a cash basis will be higher than on an accrual basis, and vice versa.
deferred tax assets
Operating Activities: Direct Method - Cash Paid for Income Taxes
___ $1,139
Less: Increase in income tax payable (5)
Cash paid for income taxes $1,134
Income tax expense
Operating Activities: Direct Method - Cash Paid for Income Taxes
Income tax expense ___
Less: Increase in income tax payable (5)
Cash paid for income taxes $1,134
$1,139
Operating Activities: Direct Method - Cash Paid for Income Taxes
Income tax expense $1,139
___ (5)
Cash paid for income taxes $1,134
Less: Increase in income tax payable
Operating Activities: Direct Method - Cash Paid for Income Taxes
Income tax expense $1,139
Less: Increase in income tax payable ___
Cash paid for income taxes $1,134
(5)
Operating Activities: Direct Method - Cash Paid for Income Taxes
Income tax expense $1,139
Less: Increase in income tax payable (5)
___ $1,134
Cash paid for income taxes
Operating Activities: Direct Method - Cash Paid for Income Taxes
Income tax expense $1,139
Less: Increase in income tax payable (5)
Cash paid for income taxes ___
$1,134
The second and third steps in preparing the cash flow statement are to determine ___ from investing activities and from financing activities.
the total cash flows
The second and third steps in preparing the cash flow statement are to determine the total cash flows from ___ and from financing activities.
investing activities
The second and third steps in preparing the cash flow statement are to determine the total cash flows from investing activities and from ___.
financing activities
Investing Activities: Direct Method
To determine the cash inflow from ___, we analyze the equipment and accumulated depreciation accounts as well as the gain on the sale of equipment.
the sale of equipment
Investing Activities: Direct Method
To determine the cash inflow from the sale of equipment, we analyze ___ and accumulated depreciation accounts as well as the gain on the sale of equipment.
the equipment
Investing Activities: Direct Method
To determine the cash inflow from the sale of equipment, we analyze the equipment and ___ accounts as well as the gain on the sale of equipment.
accumulated depreciation
Investing Activities: Direct Method
To determine the cash inflow from the sale of equipment, we analyze the equipment and accumulated depreciation accounts as well as ___.
the gain on the sale of equipment
Investing Activities: Direct Method
- ___ $8,555
- Plus equipment purchased (from informational note) 1,300
- Minus ending balance equipment (from balance sheet) (8,798)
- Equals historical cost of equipment sold $1,057
Beginning balance equipment (from balance sheet)
Investing Activities: Direct Method
- Beginning balance equipment (from balance sheet) ___
- Plus equipment purchased (from informational note) 1,300
- Minus ending balance equipment (from balance sheet) (8,798)
- Equals historical cost of equipment sold $1,057
$8,555
Investing Activities: Direct Method
- Beginning balance equipment (from balance sheet) $8,555
- ___ 1,300
- Minus ending balance equipment (from balance sheet) (8,798)
- Equals historical cost of equipment sold $1,057
Plus equipment purchased (from informational note)
Investing Activities: Direct Method
- Beginning balance equipment (from balance sheet) $8,555
- Plus equipment purchased (from informational note) ___
- Minus ending balance equipment (from balance sheet) (8,798)
- Equals historical cost of equipment sold $1,057
1,300
Investing Activities: Direct Method
- Beginning balance equipment (from balance sheet) $8,555
- Plus equipment purchased (from informational note) 1,300
- ___ (8,798)
- Equals historical cost of equipment sold $1,057
Minus ending balance equipment (from balance sheet)
Investing Activities: Direct Method
- Beginning balance equipment (from balance sheet) $8,555
- Plus equipment purchased (from informational note) 1,300
- Minus ending balance equipment (from balance sheet) ___
- Equals historical cost of equipment sold $1,057
(8,798)
Investing Activities: Direct Method
- Beginning balance equipment (from balance sheet) $8,555
- Plus equipment purchased (from informational note) 1,300
- Minus ending balance equipment (from balance sheet) (8,798)
- ___ $1,057
Equals historical cost of equipment sold
Investing Activities: Direct Method
- Beginning balance equipment (from balance sheet) $8,555
- Plus equipment purchased (from informational note) 1,300
- Minus ending balance equipment (from balance sheet) (8,798)
- Equals historical cost of equipment sold ___
$1,057
Investing Activities: Direct Method
- ___ $2,891
- Plus depreciation expense (from income statement) 1,052
- Minus ending balance accumulated depreciation (from balance sheet) (3,443)
- Equals accumulated depreciation on equipment sold $500
Beginning balance accumulated depreciation (from balance sheet)
Investing Activities: Direct Method
- Beginning balance accumulated depreciation (from balance sheet) ___
- Plus depreciation expense (from income statement) 1,052
- Minus ending balance accumulated depreciation (from balance sheet) (3,443)
- Equals accumulated depreciation on equipment sold $500
$2,891
Investing Activities: Direct Method
- Beginning balance accumulated depreciation (from balance sheet) $2,891
- ___ 1,052
- Minus ending balance accumulated depreciation (from balance sheet) (3,443)
- Equals accumulated depreciation on equipment sold $500
Plus depreciation expense (from income statement)
Investing Activities: Direct Method
- Beginning balance accumulated depreciation (from balance sheet) $2,891
- Plus depreciation expense (from income statement) ___
- Minus ending balance accumulated depreciation (from balance sheet) (3,443)
- Equals accumulated depreciation on equipment sold $500
1,052
Investing Activities: Direct Method
- Beginning balance accumulated depreciation (from balance sheet) $2,891
- Plus depreciation expense (from income statement) 1,052
- ___ (3,443)
- Equals accumulated depreciation on equipment sold $500
Minus ending balance accumulated depreciation (from balance sheet)
Investing Activities: Direct Method
- Beginning balance accumulated depreciation (from balance sheet) $2,891
- Plus depreciation expense (from income statement) 1,052
- Minus ending balance accumulated depreciation (from balance sheet) ___
- Equals accumulated depreciation on equipment sold $500
(3,443)
Investing Activities: Direct Method
- Beginning balance accumulated depreciation (from balance sheet) $2,891
- Plus depreciation expense (from income statement) 1,052
- Minus ending balance accumulated depreciation (from balance sheet) (3,443)
- ___ $500
Equals accumulated depreciation on equipment sold
Investing Activities: Direct Method
- Beginning balance accumulated depreciation (from balance sheet) $2,891
- Plus depreciation expense (from income statement) 1,052
- Minus ending balance accumulated depreciation (from balance sheet) (3,443)
- Equals accumulated depreciation on equipment sold ___
$500
Investing Activities: Direct Method
- ___ $1,057
- Less accumulated depreciation on equipment sold (calculated above) (500)
- Equals: Book value of equipment sold 557
- Plus: Gain on sale of equipment (from the income statement) 205
- Equals: Cash received from sale of equipment $762
Historical cost of equipment sold (calculated above)
Investing Activities: Direct Method
- Historical cost of equipment sold (calculated above) ___
- Less accumulated depreciation on equipment sold (calculated above) (500)
- Equals: Book value of equipment sold 557
- Plus: Gain on sale of equipment (from the income statement) 205
- Equals: Cash received from sale of equipment $762
$1,057
Investing Activities: Direct Method
- Historical cost of equipment sold (calculated above) $1,057
- ___ (500)
- Equals: Book value of equipment sold 557
- Plus: Gain on sale of equipment (from the income statement) 205
- Equals: Cash received from sale of equipment $762
Less accumulated depreciation on equipment sold (calculated above)
Investing Activities: Direct Method
- Historical cost of equipment sold (calculated above) $1,057
- Less accumulated depreciation on equipment sold (calculated above) ___
- Equals: Book value of equipment sold 557
- Plus: Gain on sale of equipment (from the income statement) 205
- Equals: Cash received from sale of equipment $762
(500)
Investing Activities: Direct Method
- Historical cost of equipment sold (calculated above) $1,057
- Less accumulated depreciation on equipment sold (calculated above) (500)
- ___ 557
- Plus: Gain on sale of equipment (from the income statement) 205
- Equals: Cash received from sale of equipment $762
Equals: Book value of equipment sold
Investing Activities: Direct Method
- Historical cost of equipment sold (calculated above) $1,057
- Less accumulated depreciation on equipment sold (calculated above) (500)
- Equals: Book value of equipment sold ___
- Plus: Gain on sale of equipment (from the income statement) 205
- Equals: Cash received from sale of equipment $762
557
Investing Activities: Direct Method
- Historical cost of equipment sold (calculated above) $1,057
- Less accumulated depreciation on equipment sold (calculated above) (500)
- Equals: Book value of equipment sold 557
- ___ 205
- Equals: Cash received from sale of equipment $762
Plus: Gain on sale of equipment (from the income statement)
Investing Activities: Direct Method
- Historical cost of equipment sold (calculated above) $1,057
- Less accumulated depreciation on equipment sold (calculated above) (500)
- Equals: Book value of equipment sold 557
- Plus: Gain on sale of equipment (from the income statement) ___
- Equals: Cash received from sale of equipment $762
205
Investing Activities: Direct Method
- Historical cost of equipment sold (calculated above) $1,057
- Less accumulated depreciation on equipment sold (calculated above) (500)
- Equals: Book value of equipment sold 557
- Plus: Gain on sale of equipment (from the income statement) 205
- ___ $762
Equals: Cash received from sale of equipment
Investing Activities: Direct Method
- Historical cost of equipment sold (calculated above) $1,057
- Less accumulated depreciation on equipment sold (calculated above) (500)
- Equals: Book value of equipment sold 557
- Plus: Gain on sale of equipment (from the income statement) 205
- Equals: Cash received from sale of equipment ___
$762
Investing Activities: Direct Method - Dividends
- ___ $2,876
- Plus net income (from the income statement) 2,210
- Minus ending balance of retained earnings (from the balance sheet) (3,966)
- Equals dividends paid $1,120
Beginning balance of retained earnings (from the balance sheet)
Investing Activities: Direct Method - Dividends
- Beginning balance of retained earnings (from the balance sheet) ___
- Plus net income (from the income statement) 2,210
- Minus ending balance of retained earnings (from the balance sheet) (3,966)
- Equals dividends paid $1,120
$2,876
Investing Activities: Direct Method - Dividends
- Beginning balance of retained earnings (from the balance sheet) $2,876
- ___ 2,210
- Minus ending balance of retained earnings (from the balance sheet) (3,966)
- Equals dividends paid $1,120
Plus net income (from the income statement)
Investing Activities: Direct Method - Dividends
- Beginning balance of retained earnings (from the balance sheet) $2,876
- Plus net income (from the income statement) ___
- Minus ending balance of retained earnings (from the balance sheet) (3,966)
- Equals dividends paid $1,120
2,210
Investing Activities: Direct Method - Dividends
- Beginning balance of retained earnings (from the balance sheet) $2,876
- Plus net income (from the income statement) 2,210
- ___ (3,966)
- Equals dividends paid $1,120
Minus ending balance of retained earnings (from the balance sheet)
Investing Activities: Direct Method - Dividends
- Beginning balance of retained earnings (from the balance sheet) $2,876
- Plus net income (from the income statement) 2,210
- Minus ending balance of retained earnings (from the balance sheet) ___
- Equals dividends paid $1,120
(3,966)
Investing Activities: Direct Method - Dividends
- Beginning balance of retained earnings (from the balance sheet) $2,876
- Plus net income (from the income statement) 2,210
- Minus ending balance of retained earnings (from the balance sheet) (3,966)
- ___ $1,120
Equals dividends paid
Investing Activities: Direct Method - Dividends
- Beginning balance of retained earnings (from the balance sheet) $2,876
- Plus net income (from the income statement) 2,210
- Minus ending balance of retained earnings (from the balance sheet) (3,966)
- Equals dividends paid ___
$1,120
Evaluation of the cash flow statement should involve an overall assessment of the sources and uses of cash between the three main categories as well as an assessment of the main drivers of cash flow within each category, as follows:
- Evaluate where the major sources and uses of cash flow are between ___
- Evaluate the primary determinants of operating cash flow.
- Evaluate the primary determinants of investing cash flow.
- Evaluate the primary determinants of financing cash flow.
operating, investing, and financing activities.
Evaluation of the cash flow statement should involve an overall assessment of the sources and uses of cash between the three main categories as well as an assessment of the main drivers of cash flow within each category, as follows:
- Evaluate where the major sources and uses of cash flow are between operating, investing, and financing activities.
- Evaluate ___.
- Evaluate the primary determinants of investing cash flow.
- Evaluate the primary determinants of financing cash flow.
the primary determinants of operating cash flow
Evaluation of the cash flow statement should involve an overall assessment of the sources and uses of cash between the three main categories as well as an assessment of the main drivers of cash flow within each category, as follows:
- Evaluate where the major sources and uses of cash flow are between operating, investing, and financing activities.
- Evaluate the primary determinants of operating cash flow.
- Evaluate ___.
- Evaluate the primary determinants of financing cash flow.
the primary determinants of investing cash flow
Evaluation of the cash flow statement should involve an overall assessment of the sources and uses of cash between the three main categories as well as an assessment of the main drivers of cash flow within each category, as follows:
- Evaluate where the major sources and uses of cash flow are between operating, investing, and financing activities.
- Evaluate the primary determinants of operating cash flow.
- Evaluate the primary determinants of investing cash flow.
- Evaluate ___.
the primary determinants of financing cash flow
Evaluation of the Sources and Uses of Cash
- Evaluate where the major sources and uses of cash flow are between operating, investing, and financing activities.
Major points to consider at this step are:
- ___
- Is operating cash fl ow positive and sufficient to cover capital expenditures?
What are the major sources and uses of cash flow?
Evaluation of the Sources and Uses of Cash
- Evaluate where the major sources and uses of cash flow are between operating, investing, and financing activities.
Major points to consider at this step are:
- What are the major sources and uses of cash flow?
- ___
Is operating cash fl ow positive and sufficient to cover capital expenditures?
Evaluation of the Sources and Uses of Cash
- Evaluate the primary determinants of operating cash flow.
Major points to consider at this step are:
- ___
- Is operating cash fl ow higher or lower than net income? Why?
- How consistent are operating cash flows?
What are the major determinants of operating cash flow?
Evaluation of the Sources and Uses of Cash
- Evaluate the primary determinants of operating cash flow.
Major points to consider at this step are:
- What are the major determinants of operating cash flow?
- ___
- How consistent are operating cash flows?
Is operating cash fl ow higher or lower than net income? Why?
Evaluation of the Sources and Uses of Cash
- Evaluate the primary determinants of operating cash flow.
Major points to consider at this step are:
- What are the major determinants of operating cash flow?
- Is operating cash fl ow higher or lower than net income? Why?
- ___
How consistent are operating cash flows?
In the initial evaluation of the cash flow statement above, it was mentioned that it is desirable that ___ are sufficient to cover capital expenditures. The excess of operating cash flow over capital expenditures is known generically as free cash flow.
operating cash flows
In the initial evaluation of the cash flow statement above, it was mentioned that it is desirable that operating cash flows are sufficient to cover ___. The excess of operating cash flow over capital expenditures is known generically as free cash flow.
capital expenditures
In the initial evaluation of the cash flow statement above, it was mentioned that it is desirable that operating cash flows are sufficient to cover capital expenditures. ___ is known generically as free cash flow.
The excess of operating cash flow over capital expenditures
In the initial evaluation of the cash flow statement above, it was mentioned that it is desirable that operating cash flows are sufficient to cover capital expenditures. The excess of operating cash flow over capital expenditures is known generically as ___.
free cash flow
