Ninja Notes: Statement of Cash Flows;

Question 1

What are examples of Cash Received for Op. Activities?

Answer 1

Cash received from:
> Customers
> Int. and Dividends
> Trading securities

Question 2

What are examples of Cash Paid for Op. Activities?

Answer 2

Cash paid for:
> Vendors
> Suppliers
> Int.
> (Relevant) Taxes
> Trading securities

Question 3

What are examples of Cash Received for Investing Activities?

Answer 3

Cash received for:
> Sale of PP&E
> Sale of Investments
> Loan Principle

Question 4

What are examples of Cash Paid for Investing Activities?

Answer 4

Cash paid for:
> Loans
> Acquisitions
> AFS or HTM securities
> (Relevant) Taxes
> Trading Securities

Question 5

What are examples of Cash Received for Financing Activities?

Answer 5

Cash received for:
> Issuance of Stock
> Issuance of Debt

Question 6

What are examples of Cash Paid for Financing Activities?

Answer 6

Cash paid for:

> Dividends

Question 7

How does the Indirect Method work?

Answer 7

Starts with Net Income.

Question 8

How does the Direct Method work?

Answer 8

Starts with Inc. for Continuing Ops.

Adjusts for changes in accounts like A/R, A/P, Inv. and non-cash revenues, expenses, gains, and losses.

Question 9

How is APIC allocated when CS and PS are issued in a lump-sum purchase?

Answer 9

APIC for each is allocated by its respective % of the total FMV of the shares x the proceeds.

Question 10

When does APIC increase for Stock Subscriptions?

Answer 10

On the date subscription is recorded, not the date paid or issued.

Question 11

When are Dividends in Arrears for Cumulative preferred stock accrued?

Answer 11

Not accrued until declared.

Question 12

How are dividends in arrears handled if a year passes and no Cumulative preferred stock in declared?

Answer 12

Then dividends in arrears are included as a disclosure, not an accrual in the financial statements.

Question 13

How is a G/L determined on the transfer of a non-monetary asset to a shareholder?

Answer 13

It is the difference between the FMV of the asset distributed at the date of distribution and its CV on the company’s books.

Question 14

For a stock dividend < 25% of CS outstanding, how should RE be handled?

Answer 14

Debit RE for FMV of stock.

Question 15

For a stock dividend > 25% of CS outstanding, how should RE be handled?

Answer 15

Debit RE for par value of stock.

Question 16

What effect do stock dividends and stock splits have on Total SHE?

Answer 16

No effect.

Question 17

What does a Stock split do?

Answer 17

Stock splits only effect par value; APIC remains the same.

Question 18

When is compensation expense recorded if options are exercised immediately?

Answer 18

At the time of grant, based on past service.

Question 19

What interest rate is used to discount stock options?

Answer 19

The risk-free interest rate.

Question 20

What is the measurement date for share-based payments classified as liabilities?

Answer 20

The settlement date.

Question 21

How are compensation costs for share-based pmts. (classified as liabilities) measured?

Answer 21

By the change in the fair value of the instrument for each reporting period.

Question 22

What is the primary purpose of a quasi reorganization?

Answer 22

To eliminated a deficit balance in RE by restating its assets to fair value.

Question 23

When are contingent Issue Agreements included in Diluted EPS?

Answer 23

If contingency is met.