Question 1

In computing cash payments for income taxes, a decrease in income taxes payable is ______________ to (from) income tax expense.

Accepted Answer

The answer of In computing cash payments for income taxes,...

Question 2

IFRS requires that non-cash items

Accepted Answer

IFRS requires that non-cash items be disclosed in the notes to the financial statements.

Question 3

In computing cash payments for operating expenses, a decrease in prepaid expenses is ______________ and an increase in accrued expenses payable is ______________ to (from) operating expenses, exclusive of depreciation.

Accepted Answer

The answer of In computing cash payments for operating expenses,...

Question 4

Under GAAP interest paid can be reported as

Accepted Answer

The answer of Under GAAP interest paid can be reported...

Question 5

You are the accountant for a small manufacturing firm. Your company is privately held, so there is no current requirement to issue financial statements using IFRS. You were hired four years ago, and at that time you instituted a cash budgeting system. Presently, you present a schedule of predicted cash sources and cash needs at the end of each week for the following week.
Ken Harmon, the company's president, has asked whether a statement of cash flows would also be useful.
Required:
Prepare a short memorandum to the president indicating whether you believe such an addition to the financial statements to be useful. Include in your memo the benefits that might be expected from a statement of cash flows and whether those are different from the benefits of a cash sources and cash needs listing.

Accepted Answer

The answer of You are the accountant for a small...

Question 6

Flint Hills Company's most recent financial statements showed dismal performance. There was a net loss of $10,000 and the statement of cash flows showed a net cash decrease in all categories. The company president called all the managers together and asked them to do all they could to make sure the next quarter's performance was better.
Ed Gray, manager of the manufacturing division, sold off old manufacturing equipment. He also reclassified several workers to part time (30 hours per week) and hired additional temporary workers to take up the slack. This saved the company money, since part-time workers do not have the same insurance and other benefits as full-time workers.
Mike Cane, financial manager, immediately suspended payments on all accounts except those on which interest would accrue. He also instituted aggressive collection procedures.
Required:
1. Were Ed Gray's actions ethical? Explain.
2. Were Mike Cane's actions ethical? Explain.
3. Were the company president's actions ethical? Explain.

Accepted Answer

The answer of Flint Hills Company's most recent financial statements...

Question 7

How is it possible for a company to suffer a net loss for a given year, yet produce a positive net cash flow from operating activities?

Accepted Answer

The answer of How is it possible for a company...

Question 8

Distinguish among the three types of activities reported in the statement of cash flows
The three activities are:

Accepted Answer

The answer of Distinguish among the three types of activities...

Question 9

Under GAAP

Accepted Answer

Under GAAP, taxes are typically treated as an operating item on the cash flow statement. Dividends paid are classified as financing activities, and dividends received are classified as operating activities. The income statement does not use the headings operating, investing, and financing; these are used in the cash flow statement.

Question 10

The statement of cash flows is the only required financial statement that is not prepared from an adjusted trial balance. What are the sources of information for preparing a statement of cash flows? Explain how the accrual basis of accounting affects the statement of cash flows.

Accepted Answer

The answer of The statement of cash flows is the...

Question 11

Cash flows from operating activities can be calculated using the indirect or direct method. Briefly describe how the two methods differ yet arrive at the same information about the net cash flows from operating activities.

Accepted Answer

The answer of Cash flows from operating activities can be...

Question 12

In the future, it appears likely that

Accepted Answer

The trend in financial reporting is towards greater consistency and standardization. As such, it is likely that in the future, the income statement and statement of financial position will have headings of operating, investing, and financing to match the statement of cash flows. This will create greater consistency in the presentation of financial information across different companies and industries.

Question 13

Why is the statement of cash flows useful?

Accepted Answer

The answer of Why is the statement of cash flows...

Quiz 13: Statement of Cash Flows