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Intermediate Accounting

Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

Chapter 23

Statement of Cash Flows - all with Video Answers

Educators

Chapter Questions

01:15

Problem 1

What is the purpose of the statement of cash flows? What information does it provide?

Ameer Said
Ameer Said
Numerade Educator
01:15

Problem 2

Of what use is the statement of cash flows?

Ameer Said
Ameer Said
Numerade Educator
02:16

Problem 3

Differentiate between investing activities, financing activities, and operating activities.

Tommy Nguyen
Tommy Nguyen
Numerade Educator
01:39

Problem 4

What are the major sources of cash (inflows) in a statement of cash flows? What are the major uses (outflows) of cash?

Alexander Cheng
Alexander Cheng
Numerade Educator
02:41

Problem 5

Identify and explain the major steps involved in preparing the statement of cash flows.

Ameer Said
Ameer Said
Numerade Educator
01:58

Problem 6

Identify the following items as (1) operating, (2) investing, or (3) financing activities: purchase of land; payment of dividends; cash sales; and purchase of treasury stock.

Natalie Britton
Natalie Britton
Numerade Educator
06:40

Problem 7

Unlike the other major financial statements, the statement of cash flows is not prepared from the adjusted trial balance. From what sources does the information to prepare this statement come, and what information does each source provide?

Puneet Prajapati
Puneet Prajapati
Numerade Educator
01:29

Problem 8

Why is it necessary to convert accrual-based net income to a cash basis when preparing a statement of cash flows?

Alexander Cheng
Alexander Cheng
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02:07

Problem 9

Differentiate between the direct method and the indirect method by discussing each method.

Jonathan Temple
Jonathan Temple
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04:53

Problem 10

Broussard Company reported net income of 3.5 dollars million in $2010 $ Depreciation for the year was 520,000 dollars accounts receivable increased $\$ 500,000 ;$ and accounts payable increased $\$ 300,000 .$ Compute net cash flow from operating activities using the indirect method.

Puneet Prajapati
Puneet Prajapati
Numerade Educator
04:45

Problem 11

Collinsworth Co. reported sales on an accrual basis of 100,000 dollars . If accounts receivable increased 30,000 dollars and the allowance for doubtful accounts increased 9,000 dollars after a write-off of $\$ 2,000,$ compute cash sales.

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
01:39

Problem 12

Your roommate is puzzled. During the last year, the company in which she is a stockholder reported a net loss of 675,000 dollars yet its cash increased $\$ 321,000$ during the same period of time. Explain to your roommate how this situation could occur.

Jennifer Stoner
Jennifer Stoner
Numerade Educator
00:17

Problem 13

The board of directors of Gifford Corp. declared cash dividends of260,000 dollars during the current year. If dividends payable was 85,00 dollars at the beginning of the year and $\$ 90,000$ at the end of the year, how much cash was paid in dividends during the year?

Zach Steedman
Zach Steedman
Numerade Educator
01:15

Problem 14

Explain how the amount of cash payments to suppliers is computed under the direct method.

Ameer Said
Ameer Said
Numerade Educator
02:25

Problem 15

The net income for Letterman Company for 2010 was 320,000 dollars . During $2010,$ depreciation on plant assets was $\$ 124,000,$ amortization of patent was $\$ 40,000,$ and the company incurred a loss on sale of plant assets of $\$ 21,000$ Compute net cash flow from operating activities.

Riham Bassal
Riham Bassal
Numerade Educator
00:00

Problem 16

Each of the following items must be considered in preparing a statement of cash flows for Blackwell Inc. for the year ended December $31,2010 .$ State where each item is to be shown in the statement, if at all.(a) Plant assets that had cost 18,0006 dollars \% years before and were being depreciated on a straight-line basis over 10 years with no estimated scrap value were sold for 4,000 dollars (b) During the year, 10,000 shares of common stock with a stated value of 20 dollars a share were issued for 41 dollars a share.(c) Uncollectible accounts receivable in the amount of
22,000 dollars were written off against the Allowance for Doubtful Accounts.
(d) The company sustained a net loss for the year of 50,000 dollars .Depreciation amounted to $\$ 22,000,$ and a gain of $\$ 9,000$ was realized on the sale of available-for-sale securities for $\$ 38,000$ cash.

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
02:24

Problem 17

Classify the following items as (1) operating, (2) investing, (3) financing, or (4) significant noncash investing and financing activities, using the direct method.
(a) Cash payments to employees.
(b) Redemption of bonds payable.
(c) Sale of building at book value.
(d) Cash payments to suppliers.
(e) Exchange of equipment for furniture.
(f) Issuance of preferred stock.
(g) Cash received from customers.
(h) Purchase of treasury stock.
(i) Issuance of bonds for land.
(j) Payment of dividends.
(k) Purchase of equipment.
(l) Cash payments for operating expenses.

Kaylee Mcclellan
Kaylee Mcclellan
Numerade Educator
01:58

Problem 18

Stan Conner and Mark Stein were discussing the presentation format of the statement of cash flows of Bombeck Co. At the bottom of Bombeck's statement of cash flows was a separate section entitled "Noncash investing and financing activities." Give three examples of significant noncash transactions that would be reported in this section.

Natalie Britton
Natalie Britton
Numerade Educator
04:45

Problem 19

During $2010,$ Simms Company redeemed 2,000,000 dollars of bonds payable for $\$ 1,880,000$ cash. Indicate how this transaction would be reported on a statement of cash flows, if at all.

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
01:47

Problem 20

What are some of the arguments in favor of using the indirect (reconciliation) method as opposed to the direct method for reporting a statement of cash flows?

Jennifer Stoner
Jennifer Stoner
Numerade Educator
04:40

Problem 21

Why is it desirable to use a worksheet when preparing a statement of cash flows? Is a worksheet required to prepare a statement of cash flows?

Shazia Naz
Shazia Naz
Numerade Educator
05:03

Problem 22

Where can authoritative iGAAP related to the statement of cash flows be found?

Puneet Prajapati
Puneet Prajapati
Numerade Educator
01:35

Problem 23

Briefly describe some of the similarities and differences between U.S. GAAP and iGAAP with respect to cash flow reporting.

Ameer Said
Ameer Said
Numerade Educator
00:49

Problem 24

Some believe that iGAAP provides too many choices within its accounting guidance. Is this a possible concern in the area of cash flow reporting? Explain.

Ameer Said
Ameer Said
Numerade Educator
01:37

Problem 25

What are some of the key obstacles for the FASB and IASI in their convergence project for the statement of casl flows?

Rashmi Sinha
Rashmi Sinha
Numerade Educator