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Exam 13: Financial Analysis: the Big Picture

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Question 51

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A loss on sale of equipment is included in the investing activities on the statement of cash flows.

A) True
B) False

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Question 52

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The statement of cash flows classifies cash receipts and payments as operating, non-operating, and financial activities.

A) True
B) False

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Question 53

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The direct method is considered to be more informative and easier to compare with the other financial statements.

The following information relates to Jatema Corporation: What was the amount of cash paid for insurance during 2016?

Profit reported for the current year was $200,000.Depreciation expense was $35,000.During the year, Accounts Receivable and Merchandise Inventory increased $18,000 and $26,000, respectively.Prepaid Expenses and Accounts Payable decreased $4,000 and $9,000, respectively.There was also a loss on the sale of equipment of $6,000.Using the indirect method, how much cash was provided by operating activities?

Under IFRS, cash receipts from interest and dividends are classified as

Noncash investing and financing activities must be reported in the body of a statement of cash flows.

Use the following information for questions Ingles Corp., a private company reporting under ASPE, engaged in the following transactions.For each transaction, indicate where, if at all, it would be classified on the statement of cash flows. -Retirement of non-current debt (incurred for lending purposes) with cash:

In preparing a statement of cash flows, preferred shares issued in exchange for land would be reported in the

Under the direct method, as an adjustment to operating expenses per the income statement, an increase in accrued liabilities would be added to operating expenses to determine cash payments for operating expenses.

Profit reported for the current year was $222,000.Depreciation expense was $35,000.Accounts Receivable and Inventories increased $4,000 and $7,000, respectively.Prepaid Expenses and Accounts Payable decreased $3,000 and $9,000, respectively.Using the indirect method, how much cash was provided by operating activities?

When equipment is sold for cash, the amount received is reflected as a cash

A disadvantage of the indirect method of reporting cash flows provided (used) by operating activities is that the difference between the net amount of cash flows from operating activities and profit is not emphasized.

Generally, the first category shown on the statement of cash flows is cash flows provided (used) by

Free cash flow is a measure of

Under the indirect method, an increase in accounts receivable during a period is deducted from profit in calculating cash provided by operating activities.

Investing activities affect non-current asset accounts.

Noncash investing and financing transactions, such as the exchange of common shares to purchase assets, represent significant investing and financing activities and are reported in a note to the financial statements.

Cost of goods sold + an increase in inventory + an increase in accounts payable = cash paid to suppliers during a period.

Profit reported for the current year was $100,000.Depreciation expense was $25,000.Accounts Receivable and Inventories decreased $5,000 and $15,000, respectively.Prepaid Expenses and Accounts Payable increased, respectively, by $500 and $4,000.Using the indirect method, how much cash was provided by operating activities?