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: -Depreciation expense. A) Added in determining cash receipts from customers B) Deducted in determining cash receipts from customers C) Added in determining cash payments to suppliers D) Deducted in determining cash payments to suppliers E) Cash outflow - investing activity F) Cash inflow - investing activity G) Cash outflow - financing activity H) Cash inflow - financing activity I) Significant non-cash investing and financing activity J) Is not shown

Depreciation expense is a non-cash charge and does not appear in the cash flow statement when using the direct method. It is accounted for in the adjustments to reconcile net income to net cash provided by operating activities in the indirect method.

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: -Conversion of notes payable into ordinary shares. A) Added in determining cash receipts from customers B) Deducted in determining cash receipts from customers C) Added in determining cash payments to suppliers D) Deducted in determining cash payments to suppliers E) Cash outflow - investing activity F) Cash inflow - investing activity G) Cash outflow - financing activity H) Cash inflow - financing activity I) Significant non-cash investing and financing activity J) Is not shown

The conversion of notes payable into ordinary shares is a non-cash transaction that affects the financing section of the company. It is typically reported in a separate schedule of non-cash investing and financing activities rather than in the statement of cash flows itself.

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 merchandise inventory during a period. A) Added in determining cash receipts from customers B) Deducted in determining cash receipts from customers C) Added in determining cash payments to suppliers D) Deducted in determining cash payments to suppliers E) Cash outflow - investing activity F) Cash inflow - investing activity G) Cash outflow - financing activity H) Cash inflow - financing activity I) Significant non-cash investing and financing activity J) Is not shown

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

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: -Sale of equipment for cash at book value. A) Added in determining cash receipts from customers B) Deducted in determining cash receipts from customers C) Added in determining cash payments to suppliers D) Deducted in determining cash payments to suppliers E) Cash outflow - investing activity F) Cash inflow - investing activity G) Cash outflow - financing activity H) Cash inflow - financing activity I) Significant non-cash investing and financing activity J) Is not shown

The sale of equipment for cash at book value is considered a cash inflow from investing activities, as it involves the disposal of a long-term asset.

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: -Issue of preferred shares for cash. A) Added in determining cash receipts from customers B) Deducted in determining cash receipts from customers C) Added in determining cash payments to suppliers D) Deducted in determining cash payments to suppliers E) Cash outflow - investing activity F) Cash inflow - investing activity G) Cash outflow - financing activity H) Cash inflow - financing activity I) Significant non-cash investing and financing activity J) Is not shown

The issue of preferred shares for cash is a financing activity, and since it brings cash into the company, it is reported as a cash inflow in the financing activities section of the statement of cash flows when using the direct method.

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: -Purchase of land for cash. A) Added in determining cash receipts from customers B) Deducted in determining cash receipts from customers C) Added in determining cash payments to suppliers D) Deducted in determining cash payments to suppliers E) Cash outflow - investing activity F) Cash inflow - investing activity G) Cash outflow - financing activity H) Cash inflow - financing activity I) Significant non-cash investing and financing activity J) Is not shown

Purchasing land for cash is considered an investing activity, and since it involves spending cash, it is reported as a cash outflow in the investing activities section of the statement of cash flows.

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: -Loss on sale of a plant asset. A) Added in determining cash receipts from customers B) Deducted in determining cash receipts from customers C) Added in determining cash payments to suppliers D) Deducted in determining cash payments to suppliers E) Cash outflow - investing activity F) Cash inflow - investing activity G) Cash outflow - financing activity H) Cash inflow - financing activity I) Significant non-cash investing and financing activity J) Is not shown

A loss on the sale of a plant asset is not shown in the statement of cash flows when using the direct method, as it is a non-cash item.

Quiz 11: Statement of Cash Flows

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