Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN: 9781305654174
Author: Gary A. Porter, Curtis L. Norton
Publisher: Cengage Learning
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Chapter 2, Problem 2.10E
Components of the Statement of
Identify each of the following items as operating (O), investing (I), financing (F), or not on the statement of cash flows (N).
______ 1. Paid for supplies
______ 2. Collected cash from customers
______ 3. Purchased land (held for resale)
______ 4. Purchased land (for construction of new building)
______ 5. Paid dividend
______ 6. Issued stock
______ 7. Purchased computers (for use in the business)
______ 8. Sold old equipment
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A statement of cash flows contains the following sections:a. net cash flow from operating activitiesb. cash flows from investing activitiesc. cash flows from financing activitiesd. investing and financing activities not affecting cashA list of items that appear on the statement is provided below:____ 1. Depreciation expense____ 2. Proceeds from sale of land at a gain____ 3. Decrease in accounts payable____ 4. Loss on cash sale of equipment____ 5. Payment for purchase of a buildingRequired:In the space provided, using the letters (a-d), indicate in which section(s) of the statement of cash flows the preceding items would most likely be classified (indirect method for operating activities). After each item affecting cash, indicate with a plus sign (+) or a minus sign (−) whether the item would be reported as an increase (inflow) or a decrease (outflow).
Match (by letter) the following items with the description or example that best fits. Each letter is used only once.Terms1. Operating activities.2. Investing activities.3. Financing activities.4. Noncash activities.5. Indirect method.6. Direct method.7. Depreciation expense.8. Cash return on assets.Descriptionsa. Begins with net income and then lists adjustments to net income in order to arrive at operating cash flows.b. Item included in net income, but excluded from net operating cash flows.c. Net cash flows from operating activities divided by average total assets.d. Cash transactions involving lenders and investors.e. Cash transactions involving net income.f. Cash transactions for the purchase and sale of long-term assets.g. Purchase of long-term assets by issuing stock to seller.h. Shows the cash inflows and outflows from operations such as cash received from customers and cash paid for inventory, salaries, rent, interest, and taxes.
What does letter B match with??
Chapter 2 Solutions
Financial Accounting: The Impact on Decision Makers
Ch. 2 - Read each definition below and write the number of...Ch. 2 - Prob. 2.1ECh. 2 - The Operating Cycle Two Wheeler Cycle Shop buys...Ch. 2 - Classification of Financial Statement Items Regal...Ch. 2 - Current Ratio Baldwin Corp. reported the following...Ch. 2 - Classification of Assets and Liabilities Indicate...Ch. 2 - Selling Expenses and General and Administrative...Ch. 2 - Prob. 2.7ECh. 2 - Income Statement Ratio The income statement of...Ch. 2 - Statement of Retained Earnings Landon Corporation...
Ch. 2 - Components of the Statement of Cash Flows Identify...Ch. 2 - Prob. 2.11ECh. 2 - Prob. 2.12MCECh. 2 - Prob. 2.13MCECh. 2 - Prob. 2.14MCECh. 2 - Materiality Joseph Knapp, a newly hired accountant...Ch. 2 - Costs and Expenses The following costs are...Ch. 2 - Prob. 2.3PCh. 2 - Prob. 2.4PCh. 2 - Working Capital and Current Ratio The balance...Ch. 2 - Single-Step Income Statement The following income...Ch. 2 - Multiple-Step Income Statement and Profit Margin...Ch. 2 - Statement of Cash Flows Colorado Corporation was...Ch. 2 - Basic Elements of Financial Reports Comparative...Ch. 2 - Prob. 2.10MCPCh. 2 - Prob. 2.11MCPCh. 2 - Prob. 2.12MCPCh. 2 - Prob. 2.1APCh. 2 - Prob. 2.2APCh. 2 - Prob. 2.3APCh. 2 - Prob. 2.4APCh. 2 - Working Capital and Current Ratio The balance...Ch. 2 - Single-Step Income Statement The following income...Ch. 2 - Prob. 2.7APCh. 2 - Prob. 2.8APCh. 2 - Prob. 2.9APCh. 2 - Comparability and Consistency in Income Statements...Ch. 2 - Prob. 2.12AMCPCh. 2 - Prob. 2.1DCCh. 2 - Prob. 2.2DCCh. 2 - Analysis of Cash Flow for a Small Business...Ch. 2 - Prob. 2.4DCCh. 2 - The Expenditure Approval Process Roberto is the...Ch. 2 - Prob. 2.6DC
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- In which section of the statement of cash flows would each of the following transactions be included? For each, identify the appropriate section of the statement of cash flows as operating (O), investing (I), financing (F), or none (N). (Note: some transactions might involve two sections.) A. collected accounts receivable from customers B. issued common stock for cash C. declared and paid dividends D. paid accounts payable balance E. sold a long-term asset for the same amount as purchasedarrow_forwardWhich is the proper order of the sections of the statement of cash flows? A. financing, investing, operating B. operating, investing, financing C. investing, operating, financing D. operating, financing, investingarrow_forwardReporting Net Cash Flow from Operating Activities The following information is available for Cornelius Inc: Required: 1. Compute the net cash flows from operating activities using the indirect method. 2. CONCEPTUAL CONNECTION Explain why Cornelius was able to report net cash flow from operating activities that was higher than net income. 3. CONCEPTUAL CONNECTION What could the difference between net income and cash flow from operating activities signal to financial statement users?arrow_forward
- On which financial statement would the Accumulated Depreciation account appear? A. Balance Sheet B. Income Statement C. Retained Earnings Statement D. Statement of Cash Flowsarrow_forwardUse the following excerpts from Nutmeg Companys financial records to determine net cash flows from operating activities and net cash flows from investing activities.arrow_forwardIn which section of the statement of cash flows would each of the following transactions be included? For each, identify the appropriate section of the statement of cash flows as operating (O), investing (I), financing (F), or none (N). (Note: some transactions might involve two sections.) A. paid advertising expense B. paid dividends to shareholders C. purchased business equipment D. sold merchandise to customers E. purchased plant assetsarrow_forward
- On which financial statement would the Supplies account appear? A. Balance Sheet B. Income Statement C. Retained Earnings Statement D. Statement of Cash Flowsarrow_forwardWhat is the statement of cash flows? List down three types of activities disclosed in the statement of cash flows with at least two examples for each activity. Open the relevant accounts to find: Tax paid Interest paid Dividend paid Interest received Gain on disposal (if cash received from sale of non-current asset is given) Cash received from sale of non-current asset (if loss on disposal is given)arrow_forwardWhat matches with letter A?arrow_forward
- Cash paid to purchase a building appears on the statement of cash flows among thea. financing activities.b. operating activities.c. investing activities.d. stockholders’ equity.arrow_forwardD. MATCHING In the following statement of cash flows, each letter represents a specific item which may appear on the statement, using the indirect method. Match the appropriate letter(s) with each transaction listed below. More than one letter may be used for each transaction. 1) 2) 3) 4) 5) 6) 7) 8) 9) Statement of Cash Flows Cash Flows from Operating Activities: Net Income Adjustments to Net Income: Add Deduct Cash Flows from Investing Activities Add Deduct Cash Flows from Financing Activities Add Deduct Significant Non-Cash Transactions Not on the Statement of Cash Flows (A) (B) (D) 30 000€ (H) Sold a short-term, available-for-sale investment at a gain. Temporarily borrowed money by signing a short-term, promissory trade notes payable. Treasury stock was purchased with cash. Declared cash dividends (but did not pay them yet). Purchased land by giving shares of common stock held in treasury. Amortized the premium on bonds payable. Paid off bonds payable before maturity and incurred a…arrow_forwardClassifying Cash Flows Identify whether each of the following would be reported as an operating, investing, or financing activity on the statement of cash flows: a. Retirement of bonds payable b. Purchase of inventory for cash c. Cash sales d. Repurchase of common stock e. Payment of accounts payable f. Disposal of equipmentarrow_forward
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