Question 1

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 GAAP. 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.
Jim Bangon 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 2

Cost of goods sold for the year amounted to $130000 and during the year accounts payable ______________ by $9000 and inventory ______________ by $5000 resulting in cash paid to suppliers of $116000.

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The answer of Cost of goods sold for the year...

Question 3

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 4

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 5

Sact Creek Company's most recent financial statements showed dismal performance. There was a net loss of $10000 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.
Ted Flay 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.
Will Smith financial manager immediately suspended payments on all accounts except those on which interest would accrue. He also instituted aggressive collection procedures.
Required:
1. Were Ted Flay's actions ethical? Explain.
2. Were Will Smith's actions ethical? Explain.
3. Were the company president's actions ethical? Explain.

Accepted Answer

The answer of Sact Creek Company's most recent financial statements...

Question 6

Free _______________ equals cash provided by operations less capital expenditures and cash dividends.

Accepted Answer

The answer of Free _______________ equals cash provided by operations...

Question 7

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.

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

Question 8

If accounts receivable increase during a period revenues on an accrual basis are ______________ than revenues on a cash basis.

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Question 9

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 10

The sale of equipment at less than its book value is a(n) ______________ of cash that is reported in the ______________ activities section.

Accepted Answer

The answer of The sale of equipment at less than...

Question 11

For each of the following items indicate by using the appropriate code letter how the item should be reported in the statement of cash flows using the direct method.

Accepted Answer

The answer of For each of the following items indicate...

Question 12

For each of the following items indicate by using the appropriate code letter how the item should be reported in the statement of cash flows using the indirect method.

Accepted Answer

The answer of For each of the following items indicate...

Question 13

Under the direct method the two largest classes of items in the operating activities section for a merchandising company are cash ________________________ and cash _________________________.

Accepted Answer

The answer of Under the direct method the two largest...

Question 14

Under the direct method noncash charges such as depreciation are _______________ in the statement of cash flows.

Accepted Answer

The answer of Under the direct method noncash charges such...

Question 15

Match between columns
                        Premises: Decrease in accounts payable during a period
Declaration and payment of a cash dividend.
Loss on sale of land.
Decrease in accounts receivable during a period.
Redemption of bonds for cash.
Proceeds from sale of equipment at book value.
Issuance of common stock for cash.
Purchase of a building for cash.
Acquisition of land in exchange for common stock.
Increase in merchandise inventory during a period.

Accepted Answer

The Answer of Added to net income and Deducted from is...

Quiz 17: Statement of Cash Flows

Cost of goods sold for the year amounted to $130000 and during the year accounts payable by $9000 and inventory by $5000 resulting in cash paid to suppliers of $116000.

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?

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.