Question 1

The cash-based ratio that is the counterpart of profit margin percentage is the:

Accepted Answer

The cash return on sales ratio is the cash-based ratio that is the counterpart of the accrual-based profit margin percentage.

Question 2

Selected transactions of Daffodil Ltd are listed below:
1. Ordinary shares are sold for cash.
2. Debentures are issued for cash at a discount.
 3. Interest on a short-term note receivable is collected.
 4. Merchandise is sold to customers for cash.
 5. Cash is paid to purchase inventory.
 6. Equipment is purchased by signing a 3-year, 10% note payable.
 7. Cash dividends on ordinary shares are declared and paid.
 8. One hundred shares of XYZ ordinary shares are purchased for cash.
 9. Land is sold for cash at its carrying value.
 10. Unsecured notes payable are converted into ordinary shares.
Required: Classify each transaction as either (a) an operating activity, (b) an investing activity, (c) a financing activity or (d) a non-cash investing and financing activity

Accepted Answer

The answer of Selected transactions of Daffodil Ltd are listed...

Question 3

Purple Ltd reported a profit of $260,000 for the current year. Depreciation recorded on buildings and equipment amounted to $80,000 for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows:
  Required: Determine the cash flows from the operating activities of the company using the indirect method.

Accepted Answer

The answer of Purple Ltd reported a profit of $260,000...

Question 4

The comparative statement of financial positions for The Blue Group appear below:
  Additional information:
1. Profit for the year ending 31 December 2020, was $20,000.
2. Cash dividends of $12,000 were declared and paid during the year.
3. Long-term investments that had a carrying amount of $18,000 were sold for $16,000.
4. Sales for 2020 were $120,000.
Required:
1. Prepare a statement of cash flows for the year ended 31 December 2020.
2. Compute the following cash-based ratios:
 a. Current cash debt coverage ratio
 b. Cash return on sales ratio
 c. Cash debt coverage ratio

Accepted Answer

The answer of The comparative statement of financial positions for...

Question 5

Comparative statement of financial positions for the Burgundy Corporation are presented below:
Additional information:
  Additional information:
1. Net loss for 2020 is $20,000. Net sales for 2020 are $250,000.
2. Cash dividends of $4,000 were declared and paid during the year.
3. Land was sold for cash at a loss of $10,000. This was the only land transaction during the year.
4. Equipment with a cost of $15,000 and accumulated depreciation of $10,000 was sold for $5,000 cash.
5. $12,000 of debentures were retired during the year at their carrying amount.
6. Equipment was acquired for ordinary shares. The fair market value of the shares at the time of the exchange was $25,000.
Required:
1. Prepare a statement of cash flows for the year ended 2020.
2. Compute the following cash based ratios:
 a. current cash debt coverage
 b. cash return on sales ratio
 c. cash debt coverage ratio.

Accepted Answer

The answer of Comparative statement of financial positions for the...

Question 6

The following information is available for the Bright Ltd for the year ended 31 December 2020:
  In addition, the following information is available from the comparative statement of financial positions at the end of 2020 and 2019:
  Required: Prepare Bright's statement of cash flows for the year ended 31 December 2020, using the indirect method.

Accepted Answer

The answer of The following information is available for the...

Question 7

Delphine Limited had total operating expenses of $140,000 in the year which included Depreciation expense of $20,000. Also during the year, prepaid expenses increased by $5,000 and accrued expenses decreased by $6,700.
Calculate the amount of cash payments for operating expenses in the year.

Accepted Answer

The answer of Delphine Limited had total operating expenses of...

Question 8

a. Sales = $804,420; Accounts receivable increased by $49,700. Calculate cash receipts from sales.
b. Cost of sales = $1,520,000; inventory decreased by $78,000; accounts payable decreased by $28,500. Calculate cash payments for purchases.
c. The income statement shows $12,500 in income taxes. The statement of financial position shows an increase in taxes payable of $2,525. Calculate the cash paid for income taxes.
 
d. Operating expenses total $104,750; Depreciation expense = $37,200; Prepaid expenses increased by $17,400; Accrued wages decreased by $5,600. Calculate cash payments for operating expenses.

Accepted Answer

The answer of a. Sales = $804,420; Accounts receivable increased...

Question 9

a. Sales = $930,000; Accounts receivable decreased by $40,000. Calculate cash receipts from sales.
b. Cost of goods sold = $650,000; inventory increased by $15,000; accounts payable increased by $28,000. Calculate cash payments for purchases.
c. The income statement shows $25,500 in income taxes. The statement of financial position shows a decrease in taxes payable of $2,500. Calculate the cash paid for income taxes.
d. Operating expenses total $100,000; Depreciation expense = $4,000; Prepaid expenses decreased by $13,000; Accrued liabilities increased by $6,000. Calculate cash payments for operating expenses.

Accepted Answer

The answer of a. Sales = $930,000; Accounts receivable decreased...

Question 10

The general ledger of the Grey Limited provides the following information:
  The company's net sales for the year was $2,000,000 and cost of sales sold amounted to $1,700,000.
Required: Compute the following:
(a) Cash receipts from customers.
(b) Cash payments to suppliers.

Accepted Answer

The answer of The general ledger of the Grey Limited...

Question 11

The income statement of Feather Ltd for the year ended 31 December 2020, reported the following condensed information:
  The statement of financial position contained the following comparative data at December 31:
  There are no depreciable assets. Accounts payable pertains to operating expenses.
Required: Prepare the operating activities section of the statement of cash flows using the direct method.

Accepted Answer

The answer of The income statement of Feather Ltd for...

Question 12

The income statement of Stalwart Ltd is shown below:
  Additional information:
1. Accounts receivable increased $400,000 during the year.
2. Inventory increased $250,000 during the year.
3. Prepaid expenses increased $200,000 during the year.
4. Accounts payable to merchandise suppliers increased $100,000 during the year.
5. Accrued expenses payable increased $180,000 during the year.
Required: Prepare the operating activities section of the statement of cash flows for the year ended 31 December 2020, for Stalwart Ltd.

Accepted Answer

The answer of The income statement of Stalwart Ltd is...

Question 13

The financial statements of Lewis Limited appear below:
  The following additional data were provided:
1. Dividends declared and paid were $14,000.
2. During the year equipment was sold for $12,000 cash. This equipment cost $28,000 originally and had a carrying amount of $12,000 at the time of sale.
3. All depreciation expense is in the selling expense category.
4. All sales and purchases are on account.
5. Accounts payable pertain to merchandise suppliers.
6. All operating expenses except for depreciation were paid in cash.
Required: Prepare a statement of cash flows for Lewis Limited using the direct method.

Accepted Answer

The answer of The financial statements of Lewis Limited appear...

Question 14

Condensed financial data of Barron Ltd appear below:
  Additional information:
1. New plant assets costing $85,000 were purchased for cash in 2020.
2. Old plant assets costing $25,000 were sold for $10,000 cash when their carrying amount was $13,000.
3. Notes with a face value of $30,000 were converted into $30,000 of ordinary shares.
4. A cash dividend of $24,000 was declared and paid during the year.
5. Accounts payable pertain to merchandise purchases.
Required:
1. Prepare a statement of cash flows for the year.
2. Compute the following cash basis ratios:
 a. Current cash debt coverage
b. Cash return on sales ratio
c. Cash debt coverage ratio

Accepted Answer

The answer of Condensed financial data of Barron Ltd appear...

Question 15

Please complete the following statements:
-Non-cash expense in the income statement are ___________ to profit and non-cash income is ______________ to compute cash provided by operations.

Accepted Answer

The answer of Please complete the following statements:
-Non-cash expense in...

Question 16

Please complete the following statements:
-Cost of sales for the year amounted to $100,000, and during the year, accounts payable ______________ by $3,000 and inventory decreased by $7,000 resulting in cash paid to suppliers of $90,000.

Accepted Answer

The answer of Please complete the following statements:
-Cost of sales...

Question 17

Please complete the following statements:
-The cash ______________ ratio indicates the company's ability to turn sales into dollars.

Accepted Answer

The answer of Please complete the following statements:
-The cash ______________...

Question 18

For each of the following items, indicate by choosing the appropriate code letter, how the item should be reported in the statement of cash flows using the direct method:
-Decrease in accounts payable during a period.

Accepted Answer

A decrease in accounts payable during a period indicates that the company has paid more to its suppliers than the purchases made on credit. Therefore, it is added back to determine the cash payments to suppliers in the direct method of the statement of cash flows.

Question 19

For each of the following items, indicate by choosing the appropriate code letter, how the item should be reported in the statement of cash flows using the direct method:
-Declaration and payment of a cash dividend.

Accepted Answer

The declaration and payment of a cash dividend are considered a financing activity because it involves the distribution of cash to shareholders. Therefore, it is reported as a cash outflow in the financing activities section of the statement of cash flows.

Question 20

For each of the following items, indicate by choosing the appropriate code letter, how the item should be reported in the statement of cash flows using the direct method:
-Decrease in accounts receivable during a period.

Accepted Answer

A decrease in accounts receivable during a period indicates that cash receipts from customers were higher than the revenue recognized on an accrual basis, hence it is added back to determine cash receipts from customers in the direct method of the statement of cash flows.

Quiz 11: Statement of Cash Flows

The cash-based ratio that is the counterpart of profit margin percentage is the:

Delphine Limited had total operating expenses of $140,000 in the year which included Depreciation expense of $20,000. Also during the year, prepaid expenses increased by $5,000 and accrued expenses decreased by $6,700. Calculate the amount of cash payments for operating expenses in the year.

The general ledger of the Grey Limited provides the following information: The company's net sales for the year was $2,000,000 and cost of sales sold amounted to $1,700,000. Required: Compute the following: (a) Cash receipts from customers. (b) Cash payments to suppliers.

Please complete the following statements: -Non-cash expense in the income statement are _ to profit and non-cash income is ____ to compute cash provided by operations.

Please complete the following statements: -Cost of sales for the year amounted to $100,000, and during the year, accounts payable ______________ by $3,000 and inventory decreased by $7,000 resulting in cash paid to suppliers of $90,000.

Please complete the following statements: -The cash ______________ ratio indicates the company's ability to turn sales into dollars.

For each of the following items, indicate by choosing the appropriate code letter, how the item should be reported in the statement of cash flows using the direct method: -Decrease in accounts payable during a period.

For each of the following items, indicate by choosing the appropriate code letter, how the item should be reported in the statement of cash flows using the direct method: -Declaration and payment of a cash dividend.

For each of the following items, indicate by choosing the appropriate code letter, how the item should be reported in the statement of cash flows using the direct method: -Decrease in accounts receivable during a period.

Quiz 11: Statement of Cash Flows

The cash-based ratio that is the counterpart of profit margin percentage is the:

Delphine Limited had total operating expenses of $140,000 in the year which included Depreciation expense of $20,000. Also during the year, prepaid expenses increased by $5,000 and accrued expenses decreased by $6,700. Calculate the amount of cash payments for operating expenses in the year.

The general ledger of the Grey Limited provides the following information: The company's net sales for the year was $2,000,000 and cost of sales sold amounted to $1,700,000. Required: Compute the following: (a) Cash receipts from customers. (b) Cash payments to suppliers.

Please complete the following statements: -Non-cash expense in the income statement are ___________ to profit and non-cash income is ______________ to compute cash provided by operations.

Please complete the following statements: -Cost of sales for the year amounted to $100,000, and during the year, accounts payable ______________ by $3,000 and inventory decreased by $7,000 resulting in cash paid to suppliers of $90,000.

Please complete the following statements: -The cash ______________ ratio indicates the company's ability to turn sales into dollars.

For each of the following items, indicate by choosing the appropriate code letter, how the item should be reported in the statement of cash flows using the direct method: -Decrease in accounts payable during a period.

For each of the following items, indicate by choosing the appropriate code letter, how the item should be reported in the statement of cash flows using the direct method: -Declaration and payment of a cash dividend.

For each of the following items, indicate by choosing the appropriate code letter, how the item should be reported in the statement of cash flows using the direct method: -Decrease in accounts receivable during a period.

Please complete the following statements: -Non-cash expense in the income statement are _ to profit and non-cash income is ____ to compute cash provided by operations.