FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
Which of the following statements is false? (You may select more than one answer.)
a. Purchasing a new manufacturing plant is classified as an investing activity.
b. Paying off accounts payable balances is classified as a financing activity.
c. Dividend payments are classified as a financing activity.
d. Either the direct or the indirect method can be used to calculate the net cash provided by financing activities.
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- 3. Using the following answer keys, you are to identify in which activity each of the transactions is classified and its effect on cash flows. Cash Flow Classification...using the capital letter only: O...Operating Activity I...Investing Activity F...Financing Activity OI...Operating and Investing Activity N...Noncash Transaction Effect on Cash Flows...using the capital letter only: I...Increase D...Decrease N...No Effect Transaction Cash Flow Classification Effect on Cash Flows Declared and paid a cash dividend. Sold short-term trading securities at a gain. Retired fully depreciated equipment. Sold a machine at a loss. Purchased long-term available-for-sale securities. Decreased accounts receivable. Purchased 90-day Treasury bill. Incurred a net loss. Declared and issued a stock dividend. Sold treasury stock.arrow_forwardWhich of the following situations required us to make an downward adjustment to net income (subtracting) when computing operating cash flows? (check all that apply) A. there was a depreciation expense B. some property was sold for a gain on the net book value C. some recognized expenses were for COGS to suppliers paid for on account D. there were some recognized revenues in accounts receivablearrow_forwardWhich of the following has a different effect on net profit than it does on cashflow? A.Cash sale to customer B.Payment for wages C.Payment for rent D.Depreciation of equipmentarrow_forward
- can you help me with the last part of the question Indicate whether the transaction increases (+), decreases (–), or increases and decreases (+/-) each element of the financial statements. Also, in the Statement of Cash Flows column, use the letters OA to designate operating activity, IA for investing activity, FA for financing activity, and leave blank for no effect. The first transaction is recorded as an example. (Not all cells require input.)arrow_forwardWhich of the following is not a use of the statement of cash flows? a.Helps creditors analyze the company's operations. b.Provides information about the sources of cash flows. c.Measures how efficiently the company's cash resources are being used. d.Provides insights into the quality and reliability of reported income.arrow_forwardMatch each of the following term with the corresponding description. Not all descriptions will be used._____ Operating activities_____ Indirect method_____ Cash equivalent_____ Investing activities_____ Direct method_____ Financing activitiesA. Measures the percent of net income that comes from high-margin products.B. Includes such events as the receipt of dividends and interest on investment assets.C. Includes assets that are very liquid and have original maturities of three months or less.D. The percent of total debt represented by a company's cash account.E. These activities include only purchases made with borrowed funds.F. Where cash flows from operating activities are calculated by converting each revenue and expense item from an accrual to a cash basis.G. This ratio multiplies net income by the average rate of interest the company receives on its investments.H. This ratio uses net income instead of operating cash flow to Analysis a company's ability to finance the cost of its…arrow_forward
- The manufacturing costs of Calico Industries for three months of the year are provided below: Total Cost Production (units) Аpril $116,100 281,600 May 90,500 164,900 June 108,300 242,000 Using the high-low method, the variable cost per unit and the total fixed costs are Oa. $2.20 per unit and $5,415 Ob. $0.40 per unit and $27,074 Oc. $3.96 per unit and $5,415 Od. $0.22 per unit and $54,148arrow_forwardThis is an accounting question about reconciling direct-method cash flow from operations to net income. I have read that generally for a simple noninventory situation the approach would be something like: Net Income Plus depreciation Minus Change in Current Assets Plus Change in Current Liabilities --> Should equal cash flows from operations in the cash flow statement. My question is about purchasing a long-term asset on account. A journal entry is made: credit accounts payable/debit long-term asset. If I generate a cash flow statement, the increase in current liabilities caused by that entry will be a part of the equation above. But that amount is not an operating cash flow, it is an investing cash flow. So my reconciliation to operating activities will be off by that amount. It seems like there's a missing adjustment in the equation, like "Minus assets purchased on account" or something like that. Example: Say my company just started and so far only has $5K contibuted cash in the…arrow_forwardWhich of the following would not be on the statement of cash flow? A. Cash flows from operating activities B. Cash flows from financing activities C. Cash flows from Contingent activities D. Cash flows from investingarrow_forward
- Statement of Cash , select the false statement a.The cash received from the sale of goods is a cash inflow b.Dividends paid to shareholders are recorded as a cash outflow c.Proceeds from the sale of bonds are recorded as a cash outflow d.A sale of a fixed asset is recorded as a cash inflowarrow_forwardThere are three sections of the cash flow statement (operating, investing, and financing). In your opinion, discuss which section is the most important and reasons the cash flow statement is different from the cash basis. Defend your position. As an extension of this conversation, discuss ways that the cash flow statement could be manipulated.arrow_forward
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