CH 12 LO 1 Statement of Cash Flows & Cash Flow Road Map

The statement of cash flow is useful because it shows:

• balances of asset, liability, and stockholders' equity accounts at a point in time.

• details of revenues and expenses used to compute net income.

• changes in stockholders' equity accounts over a period of time.

• detailed summary of where cash came from and where it was used.

Operating activities include:

• the cash effects of transactions that create revenues and expenses.

• acquiring and disposing of investments and property, plant, and equipment.

• obtaining cash from issuing debt and repaying the amounts borrowed.

• transactions that do not affect cash.

Where in the financial statements would you find the information for the operating activities? (select all that apply)

• Income Statement

• Current Assets on Balance Sheet

• Current Liabilities on Balance Sheet

• Long-Term Assets on Balance Sheet

Where in the financial statements would you find the information for the investing activities?

• Income Statement

• Stockholders' Equity on the Balance Sheet

• Long-Term Assets on the Balance Sheet

• Current Assets on the Balance Sheet

Where in the financial statements would you find the information for the financing activities? (select all that apply)

• Income Statement

• Long-Term Assets on the Balance Sheet

• Stockholders' Equity on the Balance Sheet

• Long-Term Liabilities on the Balance Sheet

If a company collected $16,000 cash from sale of goods, this transaction would be classified on the statement of cash flows as a(n):

• operating activity.

• investing activity.

• financing activity.

• noncash activity.

If a company sold an old piece of equipment at its book value (no gain or loss) for $22,000 cash, this transaction would be classified on the statement of cash flow as a(n):

• operating activity.

• investing activity.

• financing activity.

• noncash activity.

Which of the following activities would be classified as a significant noncash activity on the statement of cash flows? (check all that apply)

• Issued $1.4 million of common stock to acquire purchase land for s new distribution center.

• Purchased a $100,000 delivery truck by taking out a bank loan for the full amount.

• Paid $37,000 in cash to suppliers for inventory previously purchased on account.

• Declared and paid a cash dividend of $11,000.

• Converted bonds payable into common stock.

Which of the following transactions would be classified as an operating activity on the statement of cash flows? (check all that apply)

• Sold goods to customers for cash.

• Paid taxes due to the government.

• Paid interest due to bank on equipment loan.

• Purchased equipment with cash.

• Paid off the full amount of a loan to the bank with cash.

Which type of classification on the statement of cash flows do you think is the most difficult to understand?

• operating activities

• investing activities

• financing activities

• noncash activities