Concepts CH 17

Question 1

Adj of COGS to cash paid to suppliers 2 steps

Answer 1

1) COGS to Purchases

2) Purchases to Cash paid to suppliers

Question 2

Increase in Inventory

Answer 2

Subtracted from Income indicates that purchases were greater than COGS

Question 3

Decrease in Inventory

Answer 3

Added to Income indicates that purchases were less than COGS

Question 4

Increase in AP

Answer 4

added to Net Income cash paid to supplier was less than purchase

Question 5

Decrease in AP

Answer 5

Subtracted from Net Income cash paid to suppliers was more than purchase

Question 6

Increase in DTL

Answer 6

Added to income non-cash item

Question 7

Depreciation

Answer 7

Added to income non-cash item

Question 8

A/R Increase

Answer 8

Subtract from Net Income indicates that cash collections were less than sales

Question 9

A/R Decrease

Answer 9

Added to Net Income indicates that cash collections were more than sales

Question 10

Collections from customers equals

Answer 10

Sales Revenue adjusted for change in A/R and write-offs and recoveries

Question 11

If indirect method used

Answer 11

Interest Paid and Income Taxes Paid must be disclosed

Question 12

Repayment of debt obligations

Answer 12

is a financing activity

Question 13

2 step COGS to Purchases to Cash Paid. Decrease Inv and increase AP

Answer 13

COGS - Decrease in Inventory = Purchases

Purchases - Increase in AP = Cash Paid to supplies

Question 14

2 Step COGS to Purchase to Cash Paid. Increase Inv and decrease AP

Answer 14

COGS + Inv = Purchases

Purchases + Decrease in AP = Cash Paid to suppliers

Question 15

2 Step COGS to Purchase to Cash Paid. Increase Inv and increase AP

Answer 15

COGS + Inv = Purchases

Purchase - increase AP = Cash Paid to suppliers

Question 16

Under indirect method, net cash flow from operating activities is determined by adjusting net income for effects of

Answer 16

1) Non cash revenue and expense that were included in income
2) Items included in net income whose effects are related to financing and investing activities
3) All deferrals of past operation c-flows
4) all accruals of expected future operation cash flows

Question 17

Purchase of AFS

Answer 17

Investing Activity

Question 18

Purchase Land

Answer 18

Investing Activity

Question 19

Dividends to SH

Answer 19

Financing Activity

Question 20

Equipment thru cap lease

Answer 20

noncash investing and financing activity

Question 21

Collection of trade receivables

Answer 21

operating

Question 22

Dividends received

Answer 22

Operating

Question 23

Interest Paid

Answer 23

Operating

Question 24

Retirement of bond principal

Answer 24

financing

Question 25

Increase in current Op Liability

Answer 25

Added to income

Question 26

Decrease in Current Op Asset

Answer 26

Added to income

Question 27

Decrease In Current Op Liability

Answer 27

Subtracted from income

Question 28

Increase in Current Op Asset

Answer 28

Subtracted from Income

Question 29

Non-Cash Losses and expense

Answer 29

Added to incomme

Question 30

Losses & Expense whose effects are related to fin or invest

Answer 30

added to income

Question 31

Non-cash gains revenues

Answer 31

subtract from NI

Question 32

Gain and Revenues whose c-flow effect are related to fin or invest

Answer 32

Subtract from Ni

Question 33

Collections from customers equal

Answer 33

sales revenue - increase in A/R

Sales + Decrease in A/R

Question 34

Primary Purpose of Statement of C-FLows

Answer 34

Provide information about the cash receipts and payments of a business entity during a period. It also helps assess reasons for differences between net income and net cash flow and the effects of cash and non-cash financing and investing activities

Question 35

Issuance of stock dividend

Answer 35

because it does not affect recognized assets or liabilities, it need not be reported amount non-cash investing or financing activities disclosures

Question 36

Minimum disclosures of operating c-flows under direct method

Answer 36

1) Cash Collected from customers
2) Interest and dividends received
3) Other operating cash receipts
4) Cash paid to employees or suppliers of goods and services
5) Interest paid
6) Income taxes paid
7) other operating cash payments