5th Edition

ISBN: 9780078025914

Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby

Publisher: McGraw-Hill Education

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Textbook Question

Chapter 12, Problem 12.1E

Matching items Reported to Cash Flow Statement Categories (Indirect Method)

NIKE, Inc., is the best-known sports shoe, apparel, and equipment company in the world because of its association with sports stars such as LeBron James and Serena Williams. Some of the items included in its recent statement of cash flows presented using the indirect method are listed here.

Indicate whether each item is disclosed in the operating activities (O), investing activities (I), or financing activities (F) section of the statement or use (NA) if the item does not appear on the statement.

_____1. Additions to long-term debt.

_____2. Depreciation.

_____3. Additions to equipment.

_____4. Increase (decrease) in notes payable. (The amount is owed to financial institutions.)

_____5. (Increase) decrease in other current assets.

_____6. Cash received from disposal of equipment.

_____7. Reductions in long-term debt.

_____8. Issuance of stock.

_____9. (Increase) decrease in inventory.

_____10. Net income.

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Chapter 12, Problem 12.13ME

Chapter 12, Problem 12.2E

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Classifying Items in the Statement of Cash Flows The following items are commonly reported in a statement of cash flows (indirect method presentation). For each item 1 through 20, determine (a) in which section the item is presented (operating, investing, or financing) and (b) whether the associated dollar amount is added or subtracted in the statement. (a) (b) 1. Payments of short-term debt. AnswerOperatingInvestingFinancing AnswerAddSubtract 2. Repurchases of common stock. AnswerOperatingInvestingFinancing AnswerAddSubtract 3. Purchases of property and equipment. AnswerOperatingInvestingFinancing AnswerAddSubtract 4. Sale of investments classified as long-term. AnswerOperatingInvestingFinancing AnswerAddSubtract 5. Proceeds from the issuance of common stock. AnswerOperatingInvestingFinancing AnswerAddSubtract 6. Increase in prepaid expenses and other current assets. AnswerOperatingInvestingFinancing AnswerAddSubtract 7. Acquisition for cash of a competitor.…

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Classification of Cash Flows: For each of the following items, indicate whether the cash flow relates to an operating activity, an investing activity, or a financing activity. Cash receipts from customers for services rendered Sale of long-term investments for cash Acquisition of PPE for cash Payment of income taxes Bonds payable issued for cash Payment of cash dividends declared in previous year Purchase of short-term investments (not cash equivalents) for cash

Chapter 12 Solutions

Fundamentals of Financial Accounting

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Solution Summary: The author explains that Company N's transactions are matched with their cash flow activity and the related effects on cash.

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