F5 M5

Question 1

is available for sale securities an operating, investing or financing activity?

Answer 1

investing activity, because the company purchases securities to be able to sell in the future at some point to make money

Question 2

is goodwill impairment an operating, investing, or financing activity?

Answer 2

operating activity, because it is a non-cash expense, like depreciation

Question 3

what is the supplemental disclosure for cash paid for operating activities?

Answer 3

total cash paid for interest + income taxes required

Question 4

is dividends received an operating, investing, or financing activity?

Answer 4

an operating activity, because they are a return on a company’s investment

Question 5

are cash flow amts per share disclosed under U.S. GAAP?

Answer 5

No

Question 6

calculating net income from operating cash flows

Answer 6

cash flows from operating activities
(depreciation and amortization)
(impairment of goodwill)

Question 7

items treated as investing activities

Answer 7

1) making loans to other entities (outflow)
2) purchasing or disposing of trading securities, AFS, or HTM
3) acquiring or disposing PP&E
4) purchasing common stock from another entity
5) acquiring another entity
6) capital expenditures

Question 8

is purchasing a treasury bill recorded?

Answer 8

No, because it’s just changing the form of cash, it will be cash out and cash in, and have no effect

Question 9

what items are considered financing activities?

Answer 9

1) obtaining resources from owners, like issuing stock
2) providing return on investments to investors like paying dividends
3) repurchasing stock
4) obtaining resources from creditors, like bonds, notes, and other borrowings
5) payments of principal

Question 10

examples of noncash investing and financing activities that are reported in supplementary info

Answer 10

1) purchase of fixed assets by issuing stock
2) conversion of bonds to equity
3) acquiring assets through capital lease obligation
4) exchange of one noncash asset to another

Question 11

purchase of bonds payable

Answer 11

considered an investing activity in the debt of others

Question 12

capital lease payable

Answer 12

do not involve cash transactions, and thus disclosed in supplemental schedule of noncash investing and financing activities

Question 13

bond payable balance calc

Answer 13

beg balance
+ issuance of bonds
- redemption of bonds payable
= ending balance