TRUE OR FALSE: Read each sentence carefully and determine whether the statement isTrue or False. Write your answers in the space provided before the number.1. The Statement of Cash Flows shows the amount of cash received and used inthe business organized according to operating, investing, and financingactivities.2. Cash payment for bank loan are reported under cash flows from operatingactivities.3. If the company has no accounts receivable balance at the beginning and at theend of the year, then net sales reported in the Statement of ComprehensiveIncome will most likely be equal to the cash received from customers reported inthe SCF.4. Payments for acquisition of a merchandise inventory are reported as investingactivities.5. Statement of Cash Flows explains the observed difference in the cash balancefrom the beginning to the end of the period.6. Business activities are classified into operating, investing and funding activitiesin the SCF.7. Salary and utility payments are reported as operating activities.8. Noncash expenses such as depreciation and amortization are deducted from thenet income to arrive at the cash flows from operating activities.9. A negative cash flow from investing activities is bad indicator of the company'sability to generate cash.10. The bottom line of the Statement of Cash Flow is equivalent to the cash balancepresented in the SFP.COMPREHENSIVE PROBLEMJuana's sari-sari store had the following transactions during the year:a. Purchase of goods. Paid cash. 100,000b. Sale of goods. Received cash. 150,000c. Paid utilities 30,000d. Paid rent 10,000e. Sold equipment for cash 100,000f. Owner withdraws investment 10,0001.Compute for the net cash flow generated by/used in operating activities2.Using the given above, compute for the net cash flow generated by/used in investingactivities.Using the given above, compute for the net cash flow generated by/used in financingactivities.3.4.Using the given above, prepare a Cash Flow Statement using direct method.

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Answered: TRUE OR FALSE: Read each sentence…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. How are the various asset, liability, and stockholders’ equity accounts on a typical corporate balance sheet measured and classified? 2. How do successive balance sheets and the income statements determine cash inflows and outflows for a period? 3. How does the information provided in the cash flow statement explain changes in noncash accounts on the balance sheet? 4. What are the distinctions between operating, investing, and financing sources and uses of cash?
Which of the following statements are correct?I. A company's choice of accounting principles for financial reporting purposes affects net cash flow for the accounting period.II. A company's choice of accounting principles for financial reporting purposes does not affect operating cash flow.III. If a company sells its receivables, this will increase operating cash flow.IV. If a company sells its receivables, this will increase financing cash flow Select one: A. I and III B. I,II and III C. II and IV D. I and IV
Alex Thompson the owner-president of Computer Services Company, is unfamiliar with the statementof cash flows that you, as his accountant, prepared. He asks for further explanation. Instructions Write him a brief memo explaining the form and content of the statement of cash flows. The cash flow statement on below.
Read the following statements regarding financial statements. Select the correct statement(s). A. The income statement of a company indicates whether it is making or losing money during a financial period. B. The cash flow statement provides information on how the company generated cash and how the used its cash during the reporting period. company C. A company's working capital is the current liabilities minus the current assets of the company. D. The earnings per share (EPS) can be calculated from information provided by the financial statements by dividing earnings available to common stockholders (shareholders) by the number of shares of common stock outstanding. Mark for Review What's This?
Classify the following cash flows as either operating, investing, or financing activities, assuming the indirect method. Cash Flow 1. Cash paid to purchase investments. 2. Paid cash dividends. 3. Paid long-term debt with cash. 4. Paid cash for rent. 5. Issued common stock for cash. 6. Paid cash for wages and salaries. 7. Received cash interest on a note. 25 8. Paid cash for property taxes on building. 9. Paid accounts payable with cash. 10. Received cash from sale of land. Activity Investing Financing Financing Operating
When using the Indirect Method of preparing the Statement of Cash Flows, in the operating section, some accounts are added and some costs are subtracted. If you had to explain to someone why an increase in accounts receivable is subtracted and the opposite as to why a decrease In accounts recelvable is added, what information would you relay to them? (Include in your response the concept of accruals, FASB guidelines, sales and net income on the income statement, and the balance sheet). Answer should be in a paragraph form.
Indicate if the following transactions increase or decrease cash and classify the transactions as Operating, Investing or Financing Activities Enter I For increase and D for decrease. Enter O for Operating, I for Investing, and F for Financing. 1. Pay taxes D O 2. Collect cash from customers I O 3. Issue common stock F 4. Take out a loan from a bank 5. Purchase stock in another company I 6. Sell government debt security 7. Buy a patent 8. Retire a bonds payable 9. Pay dividends 10. Pay insurance 11. Pay interest on a loan 12. Pay principal on a loan 13. Pay salaries 14. Repurchase treasury stock 15. Sell a copyright to another firm 16. Pay suppliers for inventory 17. Dividend payments received from stock investment. 18. Interest payments received from investment in government debt securities.
A company uses a spreadsheet to prepare its statement of cash flows. Indicate whether each of the followingitems would be recorded in the Debit column or Credit column of the spreadsheet’s statement of cashflows section. Increase in interest payable
Which of the following is the final step in preparing a spreadsheet (work sheet) for the statement of cash flows using the indirect method? Add the Debit and Credit Transactions columns and verify that the totals are equal. Analyze all noncash accounts and enter the net increase (decrease) in cash during the period. Add the Balance column totals, which should total to zero. After all noncash accounts have been analyzed, enter the net increase (decrease) in cash during the period.
if the company paid the salaries payable in the next period, the transaction will be as bellow cash debit, salaries payable credit. cash debit , salaries credit. salaries expense debit, cash credit. salaries payable debit, cash credit. Note collection in the bank reconciliation will be Add to the balance per bank. Deduct from balance per bank. O Add to the balance per book. Deduct from balance per book. cost of goods sold equal to O Goods available for sale mince beginning inventory. O Net sale mince goods available for sale Net purchase mince beginning inventory. beginning inventory blues net purchase mince ending inventory
For each of the following transactions, indicate whether operating (O), investing (I), or financingactivities (F) are affected and whether the effect is a cash inflow ( + ) or outflow ( - ), or (NE) if thetransaction has no effect on cash.1. Received deposits from customers for products to be delivered the following period.2. Principal repayments on loan.3. Paid cash to purchase new equipment.4. Received proceeds from loan.5. Collected payments on account from customers.6. Recorded and paid salaries and wages to employees.7. Paid cash for building construction.8. Recorded and paid interest to debt holders.
For each independent situation below, indicate whether the transactions would be included in the statement of cash flows or not. No = Not included Yes= Included Transaction Included Sold items on account Wrote check to pay utilities Received cash investment by owner Recorded wages owed to employees Received bill for advertising

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