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The following information is available for the Brookstone Company: The following information is available for the Brookstone Company: Additional information: (1) There was no gain or loss on the sales of the long-term investments, nor on the bonds retired. (2) Old machinery with an original cost of $45,060 was sold for $2,520 cash. (3) New machinery was purchased for $81,060 cash. (4) Cash dividends of $40,320 were paid. (5) Additional shares of stock were issued for cash. Prepare a complete statement of cash flows for calendar-year 2013 using the indirect method. The following information is available for the Brookstone Company: Additional information: (1) There was no gain or loss on the sales of the long-term investments, nor on the bonds retired. (2) Old machinery with an original cost of $45,060 was sold for $2,520 cash. (3) New machinery was purchased for $81,060 cash. (4) Cash dividends of $40,320 were paid. (5) Additional shares of stock were issued for cash. Prepare a complete statement of cash flows for calendar-year 2013 using the indirect method. Additional information: (1) There was no gain or loss on the sales of the long-term investments, nor on the bonds retired. (2) Old machinery with an original cost of $45,060 was sold for $2,520 cash. (3) New machinery was purchased for $81,060 cash. (4) Cash dividends of $40,320 were paid. (5) Additional shares of stock were issued for cash. Prepare a complete statement of cash flows for calendar-year 2013 using the indirect method. The following information is available for the Brookstone Company: Additional information: (1) There was no gain or loss on the sales of the long-term investments, nor on the bonds retired. (2) Old machinery with an original cost of $45,060 was sold for $2,520 cash. (3) New machinery was purchased for $81,060 cash. (4) Cash dividends of $40,320 were paid. (5) Additional shares of stock were issued for cash. Prepare a complete statement of cash flows for calendar-year 2013 using the indirect method.

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(a) Received from sales of lon...

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Explain how cash flows from investing and financing activities are determined.

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Cash flows from investing activities are...

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Use the information provided to calculate the missing cash paid for merchandise for the period. Use the information provided to calculate the missing cash paid for merchandise for the period.

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A company's transactions with its creditors to borrow money and/or to repay the principal amounts of both short- and long-term debt are reported as cash flows from:


A) Operating activities.
B) Investing activities.
C) Financing activities.
D) Direct activities.
E) Indirect activities.

F) C) and E)
G) A) and E)

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The indirect method separately lists each major item of operating cash receipts and cash payments.

A) True
B) False

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A company had net cash flows from operations of $120,000, cash flows from financing of $330,000, total cash flows of $500,000, and average total assets of $2,500,000. The cash flow on total assets ratio equals:


A) 4.8%.
B) 5.0%.
C) 20.0%.
D) 20.8%.
E) 24.0%.

F) A) and C)
G) D) and E)

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Bagrov Corporation had a net decrease in cash of $10,000 for the current year. Net cash used in investing activities was $52,000 and net cash used in financing activities was $38,000. What amount of cash was provided (used) in operating activities?


A) $100,000 provided.
B) $(100,000) used.
C) $80,000 provided.
D) $(80,000) used.
E) $(10,000) useD.Operating - 52,000 investing - 38,000 financing = 10,000 cash decrease

F) B) and E)
G) B) and C)

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In preparing a company's statement of cash flows for the most recent year, the following information is available: In preparing a company's statement of cash flows for the most recent year, the following information is available: Net cash flows from financing activities for the year were: A) $304,000 of net cash used. B) $82,000 of net cash provided. C) $96,000 of net cash used. D) $192,000 of net cash used. E) $52,000 of net cash provideD. Net cash flows from financing activities for the year were:


A) $304,000 of net cash used.
B) $82,000 of net cash provided.
C) $96,000 of net cash used.
D) $192,000 of net cash used.
E) $52,000 of net cash provideD. In preparing a company's statement of cash flows for the most recent year, the following information is available: Net cash flows from financing activities for the year were: A) $304,000 of net cash used. B) $82,000 of net cash provided. C) $96,000 of net cash used. D) $192,000 of net cash used. E) $52,000 of net cash provideD.

F) C) and D)
G) B) and D)

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The statement of cash flows explains the difference between the beginning and ending balances of cash and cash equivalents.

A) True
B) False

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All of the following statements related to reporting cash flows from operating activities under U.S. GAAP and IFRS are true except:


A) The definition of cash and cash equivalents is similar for U.S.GAAP and IFRS.
B) U.S.GAAP requires cash flows from interest revenue and dividend revenue be classified as operating activities.
C) IFRS permits classification of interest revenue and dividend revenue under operating or investing activities.
D) U.S.GAAP requires cash outflows for interest expense to be classified as financing activities.
E) IFRS permits classification of interest expense under operating or financing activities.

F) B) and D)
G) None of the above

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A company reported that its bonds with a par value of $50,000 and a carrying value of $57,000 are retired for $60,000 cash, resulting in a loss of $3,000. The amount to be reported under cash flows from financing activities is:


A) $(3,000) .
B) $60,000.
C) $(57,000) .
D) $7,000.
E) ($7,000) .

F) C) and D)
G) A) and B)

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A main purpose of the statement of cash flows is to report all the major cash ________ and cash _______________.

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receipts (...

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All of the following statements related to preparation of the statement of cash flows under U.S. GAAP and IFRS are true except:


A) Both U.S.GAAP and IFRS permit the reporting of cash flows from operating activities using either the direct or indirect method.
B) IFRS permits classification of cash outflows for interest expense under operating or financing based on which one results in better cash flows from operating activities.
C) U.S.GAAP requires cash outflows for income tax be classified as operating activities.
D) IFRS permits the splitting of income tax cash flows among operating, investing, and financing depending on the sources of that tax.
E) IFRS permits classification of interest expense under operating or financing activities provided it is consistently applied across periods.

F) B) and C)
G) A) and C)

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Which of the following transactions or events should be reported as a source of cash from operating activities when using the direct method?


A) Credit sales.
B) Cash collections from customers.
C) Depreciation expense.
D) Cash received from the sale of a building.
E) Cash received from the sale of treasury stock.

F) None of the above
G) C) and D)

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Use the following company information to calculate net cash provided or used by investing activities: (a) Equipment with a book value of $185,000 and an original cost of $300,000 was sold for $167,000. (b) Paid $52,000 cash for a new delivery van. (c) Purchased land costing $37,500, paid in cash. (d) Purchased treasury stock for $61,000 cash. (e) Long-term investments in stock with a cost of $46,500 are sold for $42,000 cash.

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A spreadsheet can help organize the information needed to prepare a statement of cash flows.

A) True
B) False

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Explain the use of a spreadsheet in the preparation of the statement of cash flows.

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A spreadsheet can help organize the info...

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Equipment costing $100,000 with accumulated depreciation of $40,000 is sold at a loss of $10,000. This implies that $40,000 cash was received from the sale.

A) True
B) False

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The direct method for computing and reporting net cash flows from operating activities involves adjusting the net income figure to obtain net cash provided or used by operating activities.

A) True
B) False

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The cash flow on total assets ratio:


A) Is the same as return on assets.
B) Is the same as profit margin.
C) Can be an indicator of earnings quality.
D) Is highly affected by accounting principles of income recognition and measurement.
E) Is average net assets divided by cash flows from operations.

F) A) and E)
G) A) and B)

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