Chapter 16

Question 1

Statement of cashflows

Answer 1

report of cash receipts and payments for a period

Question 2

purpose of cashflows

Answer 2

predict future cash flows, evaluate management, predict ability to pay debts/dividends

Question 3

Operating activities

Answer 3

activities that create revenues and expenses

Question 4

interest revenue/expenses, tax expenses, and dividend income/payments are all

Answer 4

Operating activities

Question 5

Investing Activities

Answer 5

activities that increase or decrease long term assets

Question 6

Gains/losses on sale of PPE, lending and collection of notes receivable, are both

Answer 6

investing activities

Question 7

financing activities

Answer 7

activities that increase or decrease long term liabilities and equity

Question 8

issuing stock is a

Answer 8

financing activity

Question 9

paying dividends is a

Answer 9

financing activity and operating activity

Question 10

buying and selling treasury stock is

Answer 10

financing activity

Question 11

loans and loan payments are

Answer 11

financing activity

Question 12

purchase of equipment forlong term note payable, equipment received in exchange for stock are

Answer 12

Noncash investing and financing activities

Question 13

Noncash investing and financing activities ____ included on the statement of cash flows

Answer 13

are not

Question 14

indirect method/direct method

Answer 14

a format of operating activities section of the statement of cashflows.

Question 15

using the indirect method net ____ reconciles to net ____ provided by operating activities

Answer 15

income; cash

Question 16

using the direct method lists the operating cash ____ and _____

Answer 16

receipts; payments

Question 17

direct and indirect methods use ____ computations and yield _____ amount of net ____ _____

Answer 17

different; same; cash flow

Question 18

direct and indirect methods list investing and financing activities in _____ ways

Answer 18

the same

Question 19

most companies use the _____ on their statement of cashflows

Answer 19

indirect

Question 20

to prepare the statement of cash flows you need the current year _____ ____ as well as the _____ _____ from the current and prior years

Answer 20

income statement; balance sheets

Question 21

using the indirect method, the ___ _____ is the first line on the statement of cashflows

Answer 21

net income

Question 22

cash flows are ____ basis

Answer 22

cash

Question 23

net income is ____ basis

Answer 23

accrual

Question 24

additions and subtractions to net income are called

Answer 24

adjustments to reconcile net income to net cash provided by operating activities

Question 25

adjustments include ____ _____ expenses; such as ______ and ______

Answer 25

non cash; depreciation; amortization

Question 26

non cash expenses are ___ to net income

Answer 26

added

Question 27

gains and losses on the sale of PPE are already included in ____ _____ and should be ____ from ___ ___ so the entire receipt of cash can be included from the sale can be included in the ____ activities section

Answer 27

net income; removed; net income; investing

Question 28

gains on PPE are ____ and losses on PPE are _____ to net income

Answer 28

subtracted; added

Question 29

an _____ in a current asset other than cash causes a decrease adjustment to ___ ____

Answer 29

increase; net income

Question 30

an _____ in a current asset other than cash causes a increase adjustment to ___ ____

Answer 30

decrease; net income

Question 31

an ____ in a current liability causes an increase adjustment to ____ ______

Answer 31

increase;net income

Question 32

an ____ in a current liability causes an decrease adjustment to ____ ______

Answer 32

decrease;net income

Question 33

net income + net cash inflow=

Answer 33

net cash PROVIDED by operating activities

Question 34

net income - net cash outflow=

Answer 34

Net cash USED for operating activities

Question 35

investing activities affect ____ _____ assets

Answer 35

long term

Question 36

financing activities affect ____ & ______ accounts

Answer 36

liability; equity

Question 37

to report dividends on the statement of cash flows they must be ____ ___

Answer 37

paid out

Question 38

stock dividends do not involve cash so they ___ reported on the financing section of the statement of cash flows

Answer 38

not reported

Question 39

Net increase/decrease in cash is the sum ofcash ___ or ___ by ____ ____ ____

Answer 39

used; provided; operating, investing, financing activities

Question 40

Begining cash +/- increase/decrease in cash for period, = ____ ___

Answer 40

cash balance

Question 41

free cash flow

Answer 41

amount of cash available from operating activities after paying for planned investments in long term assets, and after paying dividends to shareholders.

Question 42

net cash provided by operating activities - cash payments for planned investments in long term assets- cash dividends=

Answer 42

free cash flow

Question 43

free cash flow is used to estimate the amount of cash ___ for unexpected opportunities

Answer 43

available

Question 44

the FASB prefers the _____ method of reporting cash flows

Answer 44

direct

Question 45

Direct method includes all cash received and paid but not _____ and ____

Answer 45

receivable ; payable

Question 46

to record cash receipts using the direct method, you must add net ___ ____ and beginning ____ ___, and subtract ending ____ ____

Answer 46

sales revenue;AR;AR

Question 47

direct method activities are reported as actually ____/____

Answer 47

paid/received

Question 48

COGS on the direct method statement of cash flows equals COGS minus Beginning _____ ____+ ending _____ _____+ beginning ____ ____- ending _____ ____

Answer 48

merchandise inventory;merchandise inventory;AP;AP

Question 49

non cash expenses and gains or losses on disposal of long term assets ______ reported on the _____ statement but are ____ ____ in the operating activities when using the _____ Method

Answer 49

are; income;not included; direct

Question 50

To find the net cash provided by operating activities using the direct method, we _____ all the cash receipts and ____ all the cash payments. The difference is the Net cash.

Answer 50

add;subtract