...inflow from financing activities. | | (b) | Purchased a machine for $30,000, giving a long-term note in exchange. * Noncash investing and financing activities. | | (c) | Issued $200,000 par value common stock upon conversion of bonds having a face value of $200,000. * Noncash financing activities. | | (d) | Declared and paid a cash dividend of $18,000. * Cash outflow from financing activities. | | (e) | Sold a long-term investment with a cost of $15,000 for $15,000 cash. * Cash inflow from investing activities. | | (f) | Collected $16,000 of accounts receivable. * Cash inflow from operating activities. | | (g) | Paid $18,000 on accounts payable. * Cash outflow from operating activities. | | Classify transactions by type of activity Instructions Analyze the transactions and indicate whether each transaction resulted in a cash flow from operating activities, investing activities, financing activities, or noncash investing and financing activities. E13-2 An analysis of comparative balance sheets, the current year's income statement, and the general ledger accounts of Gagliano Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary. | (a) | Payment of interest on notes payable.Operating activity | | (b) | Exchange of land for patent.Noncash investing and financing activity | | (c) | Sale of building at book value. | Investing activity | ...
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...CHAPTER 23 Statement of Cash Flows ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) | | |Brief Exercises | | | Concepts for | |Topics |Questions | |Exercises |Problems |Analysis | |1. |Format, objectives purpose, and source |1, 2, 7, | | | |1, 2, 5, 6 | | |of statement. |8, 12 | | | | | |2. |Classifying investing, financing, and |3, 4, 5, 6, |1, 2, 3, |1, 2, 10, 16 | |1, 3, 4, 5 | | |operating activities. |16, 17, 19 |6, 7, | | | | | | | |8, 12 | | | | |3. |Direct vs. indirect methods of preparing|9, 20 |4, 5, 9, |3, 4 | |5 | | |operating activities. | |10, 11 | | | | |4. |Statement...
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...Flows EXERCISE 23-1 E23-1 (Classification of Transactions) Springsteen Co. had the following activity in its most recent year of operations. (a) Pension expense exceeds amount funded. (b) Redemption of bonds payable. (c) Sale of building at book value. (d) Depreciation. (e) Exchange of equipment for furniture. (f) Issuance of ordinary shares. (g) Amortization of intangible assets. (h) Purchase of treasury shares. (i) Issuance of bonds for land. (k) Increase in interest receivable on notes receivable. (j) Payment of dividends. (l) Purchase of equipment. a) Investing activity. b) Financing activity. c) Investing activity. d) Operating—add to net income. e) Significant noncash investing and financing activity. f) Financing activity. g) Operating—add to net income. h) Financing activity. i) Significant noncash investing and financing activity. j) Financing activity. k) Operating—deduct from net income. l) Operating—add to net income. 1. The statement of cash flows is divided into four activities. A. True B. False There are three activities comprising the statement of cash flows. 2. The difference between the direct method and the indirect method centers around the operating activities section of the statement of cash flows. A. True B. False The two methods only differ in the preparation of the operating activities section of the statement. 3. Only the comparative balance sheet is needed to prepare...
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...CHAPTER 23 Statement of Cash Flows SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 23-1 |Cash flows from investing activities | | | Sale of land |$ 180,000 | | Purchase of equipment |(415,000) | | Purchase of available-for-sale securities | (59,000) | | Net cash used by investing activities |$(294,000) | BRIEF EXERCISE 23-2 |Cash flows from financing activities | | | Issuance of common stock |$ 250,000 | | Issuance of bonds payable |510,000 | | Payment of dividends |(350,000) | | Purchase of treasury stock...
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...Cashflows The cash flow statement gives us the information about the Colgate Company’s cash receipts and cash payments during an accounting period. It also shows us how these cash flaws link the end cash balance to the beginning balance. There are three parts in the cash flow statement. They are cash flows provided by operating activities, cash flows used in investing activities and cash flows used in financing activities. The net cash from all the company’s operating activities. Operating activities generally involve producing and delivering goods and providing services. A principle investing activity is the acquisition of plant and equipment and financing activities usually include the sale or purchase of stock and the payment of dividends on stock.(Accounting, 2014). |Period Ending | |Dec 31, 2013 | |Dec 31, 2012 | |Dec 31, 2011 ...
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...Financial Accounting, 9e (Harrison/Horngren/Thomas) Chapter 12 The Statement of Cash Flows 12.1 Learning Objective 12-1 1) The statement of cash flows is presented for a period of time. Answer: FALSE Diff: 1 LO: 12-1 AICPA Bus Persp: Legal/Regulatory AICPA Functional: Reporting 2) The statement of cash flows is an optional statement that can be prepared along with the income statement, balance sheet, and statement of retained earnings. Answer: FALSE Diff: 1 LO: 12-1 AICPA Bus Persp: Legal/Regulatory AICPA Functional: Reporting 3) The statement of cash flows shows the relationship of assets to cash flows. Answer: FALSE Diff: 1 LO: 12-1 AICPA Bus Persp: Legal/Regulatory AICPA Functional: Reporting 4) For reporting purposes, a company must prepare both an income statement and a statement of cash flows. Answer: TRUE Diff: 1 LO: 12-1 AICPA Bus Persp: Legal/Regulatory AICPA Functional: Reporting 5) Cash equivalents do NOT include highly liquid short-term investments. Answer: FALSE Diff: 1 LO: 12-1 AICPA Bus Persp: Legal/Regulatory AICPA Functional: Reporting 6) A statement of cash flows indicates the sources and uses of cash at a point in time. Answer: FALSE Diff: 1 LO: 12-1 AICPA Bus Persp: Legal/Regulatory AICPA Functional: Reporting 7) The statement of cash flows will NOT help predict future cash flows. Answer: FALSE Diff: 1 LO: 12-1 AICPA Bus Persp: Legal/Regulatory AICPA Functional: Reporting ...
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...Cash Flow Statement Basics Χ The statement shows cash flow from operations, from investing, and from financing. The total of operating, investing, and financing cash flows equals the change in cash, through an algebraic identity. Χ Cash flow from operations is cash collected from the sales of goods and services and from investments (e.g., interest and dividends), less cash spent for operating expenses. These include cash paid to suppliers, employees, interest, tax, and other miscellaneous operating expenses. The term operating cash flow is a net concept. Χ Cash flow from investing is cash spend on investments such as marketable securities, investments, PP&E, land, and patents, less cash received from the sales of these types of investments. The term investing cash flow is a net concept. In most cases, investing cash flow is negative. Χ Cash flow from financing is cash generated from the issuance of debt and the sale of stock, less cash spent for dividends, debt repayment, and the purchase of stock. Again, the term financing cash flow is a net concept. Χ In a sense, the objective of any business is to generate negative cash flows from financing, which represents the payback for equity and debt financiers. Any investment made in the company is done with the expectation that one day, the firm will be able to internally support substantial amounts of negative financing cash flows. Χ Non-cash transactions do not affect the cash flow statement. For example, if...
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...Assignment ACCT 311 The Cash Flow Statement: Problems with the Current Rules This article is about the cash flow statement and its problems with the current rules. It was written by Neil S. Weiss and James G.S. Yang. The cash flow statement has been used to give information about a company’s performance, as well as well as its major activities during the year. However, some of the rules for preparation make the cash flow statement less useful than it should be. Based on the article, the authors listed weaknesses of the statement of cash flow which are divided in five sections. 1) differences between commercial and industrial companies versus financial institutions; 2) problems with operating activities; 3) problems with investing activities; 4) problems with financing activities; and 5) the role of free cash flow. Due to these weaknesses, the authors offer potential solutions to these problems that could improve the cash flow statement. Regarding the case of financial institutions, the identification of the core operating activities is important, because they differ markedly from nonfinancial companies in this respect. Considering commercial banking institutions, where the core operations can be divided between on–balance sheet activities and off–balance sheet activities. The off–balance sheet activities consist primarily of fee-based activities for services rendered that do not create an asset or a liability. These create no problem for the cash flow presentation because they appear...
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...operating, investing and financing activities during a specific time period. Cash flow statements and projections express a business's results or plans in terms of cash in and out of the business, without adjusting for accrued revenues and expenses. The cash flow statement doesn't show whether the business will be profitable, but it does show the cash position of the business at any given point in time by measuring revenue against outlays. Cash flow is determined by looking at three components by which cash enters and leaves a company: core operations, investing and financing. Operations- Measuring the cash inflows and outflows caused by core business operations, the operations component of cash flow reflects how much cash is generated from a company's products or services. Generally, changes made in cash, accounts receivable, depreciation, inventory and accounts payable are reflected in cash from operations. Investing- Investing activities focuses on the purchase of the long-term assets a company needs in order to make and sell its products, and the selling of any long-term assets. It reports changes in equipment, assets or investments relate to cash from investing. Financing- Financing activities include the inflow of cash from investors such as banks and shareholders, as well as the outflow of cash to shareholders as dividends as the company generates income. Other activities which impact the long-term liabilities and equity of the company are also listed in the financing activities...
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...change in cash resulting from the operating, investing, and financing activities of a company during the period. The information in a statement of cash flows should help investors, creditors, and others assess: ▪ The company’s ability to generate future cash flows. By examining relationships between items in the statement of cash flows, investors and others can better predict the amounts, timing, and uncertainty of future cash flows. ▪ The company’s ability to pay dividends and meet obligations. Employees, creditors, stockholders, and customers should be particularly interested in this statement because it alone shows the flows of cash in a business. ▪ The reasons for the difference between net income and net cash provided (used) by operating activities. Many financial statement users investigate the reasons for the difference between net income and cash provided by operating activities and then they can assess for themselves the reliability of the income numbers. ▪ The investing and financing transactions during the period. By examining a company’s investing activities and financing activities, a financial statement reader can better understand why assets and liabilities increased or decreased during the period. Study Objective 2 - Distinguish Among Operating, Investing, and Financing Activities The statement of cash flows classifies cash receipts and cash payments into operating, investing, and financing activities. Transactions within each activity...
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...------------------------------------------------- BUS 242 -- Test IV TRUE/FALSE ____1. A corporation is obligated to make periodic interest payments on a bond and also to repay the bond's principal amount at the maturity date of the bond. ____2. If a corporation liquidates, stockholders have a prior claim over bondholders to corporate assets. ____3. Bonds are quoted in the bond market at a percentage of face value, while stocks are quoted in the stock market in terms of dollars and cents. ____4. A $1,000 face value bond selling at 104 would cost $1,000.40 in the bond market. ____5. The stated rate of interest is the rate prevailing in the bond market at the time the bonds are issued. ____6. If the stated rate of interest is 10% and the market rate of interest is 8%, the bonds will most likely sell at a premium. ____7. The journal entry to record the issuance of $100,000 face value bonds at 102 involves a debit to the Premium on Bonds Payable account for $2,000. ____8. The amortization of a bond premium reduces interest expense on the income statement. ____9. The amortization of $1,000 of bond premium would be recorded by debiting the Premium on Bonds Payable account and crediting the Interest Expense account for $1,000. ___10. The amortization of $1,500 of bond discount would be recorded by debiting the Discount on Bonds Payable account and crediting the Interest Expense account for $1,500. ___11. When bonds are sold between interest...
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...Topic 7 Solutions to Homework [pic] 1. Quick Check Answers: 1. b 2. d 3. c 2. See Lecture Notes Point 5 3. Cash Flow Statement (15-20 min.) Workings: Examine each transaction and decide 1. Is it a cash flow? 2. If it is then classify as Operating, Investing or Financing. 3. Calculate Cash balance at end of period. Cash = 70000 – 60000 + 3000 -100 +1200 -1200 -500 = 12,400 |Date |Transaction |Cash Flow |Classify | |March | | | | |1 |Ray Hawk invested $70 000 of cash to start the business. |yes |Financing inflow | |2 |Purchased supplies of $200 on credit. |no | | |4 |Paid $60 000 cash for a building to use for storage. |Yes |Investing outflow | |6 |Performed services for customers and received cash, |Yes |Operating inflow | | |$3 000. | | | |9 |Paid $100 on accounts payable. ...
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...Cash by showing the effects on cash of a business's operating, investing and financing activities for the accounting period. It explains the change in Cash by showing the effects on cash of a business's operating, investing and financing activities so that it shows on how different users of the SCF use this statement. The three major classifications of cash flows in the SCF are operating activities, investing activities and financing activities. The two alternative approaches to preparing the SCF is direct and indirect. Direct method shows cash receipts from sales and cash disbursements while indirect method starts with net income and then adjusts for noncash items. When the indirect approach is used in preparing the SCF the net income and noncash items must be provided. The indirect appoach with regard to the statement of cash flows, one of tow methods for converting net income to net cash flow from operations. It is shown on the SCF at the end of the year category. It relates to the change by explaining the change in cash by showing the effects on cash of a businee's operating, investing and fiancing activites for the accounting period. It is shown under noncurrent liabilties and owner's equity accounts. Problem 1 operating activities financing activities financing activities financing activities investment activities investment activities financing activities financing activities financing activities operating activities Problem 2 1a. sold delivery...
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...PURWANINGRUM CASE 3-1 Cash Flow Analysis – Orthodontic Centers of America 1. Actual cash collection for year 1998 to 2000: | 2000 | 1999 | 1998 | Total Receivables | 3.535.000 | 87.563.000 | 66.477.000 | net change | (84.028.000) | 21.086.000 | 66.477.000 | | | | | Patient prepayments | - | - | 4.326.000 | net change | - | (4.326.000) | 4.326.000 | | | | | Net Revenue | 268.836.000 | 226.290.000 | 171.298.000 | Less: change in account receivable | 84.028.000 | (21.086.000) | (66.477.000) | Plus: change in advances | - | (4.326.000) | 4.326.000 | Actual Cash Collections | 352.864.000 | 200.878.000 | 109.147.000 | 2. (i) Comparison of cash collection with revenue reported for each year: | 2000 | 1999 | 1998 | Cash Collections | 352.864.000 | 200.878.000 | 109.147.000 | Reported Revenue | 268.836.000 | 226.290.000 | 171.298.000 | % Change | 31,26% | -11,23% | -36,28% | Difference | 84.028.000 | (25.412.000) | (62.151.000) | (ii) Comparison of cash collection with revenue using pre-Januay 1, 2000 recognition method: | 2000 | 1999 | 1998 | ...
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...Connecticut 230-10-45 Other Presentation Matters General Note: The Other Presentation Matters Section provides guidance on other presentation matters not addressed in the Recognition, Initial Measurement, Subsequent Measurement, and Derecognition Sections. Other presentation matters may include items such as current or long-term balance sheet classification, cash flow presentation, earnings per share matters, and so forth. The FASB Codification also contains Presentation Topics, which provide guidance for general presentation and display items. See those Topics for general guidance. General > Form and Content 45-1 A statement of cash flows shall report the cash effects during a period of an entity's operations, its investing transactions, and its financing transactions. 45-2 A reconciliation of net income and net cash flow from operating activities, which generally provides information about the net effects of operating transactions and other events that affect net income and operating cash flows in different periods, also shall be provided. 45-3 Financial statements shall not report an amount of cash flow per share. Neither cash flow nor any component of it is an alternative to net income as an indicator of an entity's performance, as reporting per-share amounts might imply. Reporting a contractually determined per-unit amount, such as a per unit amount of cash flow distributable under the terms of a partnership agreement or other agreement between an entity and its owners...
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