FUNDAMENTALS OF FINANCIAL ACCOUNTING
6th Edition
ISBN: 9781260823875
Author: PHILLIPS
Publisher: MCGRAW-HILL CUSTOM PUBLISHING
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Chapter 12, Problem 8MC
To determine
To identify: the requirements of a company, if it is engaged in a material non-cash transaction.
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Students have asked these similar questions
Which of the following returns is consistent with contractual cash flows that are solely payments of principal and interest or SPPI?
I. Return of passage of time
II. Return for the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation
III. Return for the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset
IV. Return for amounts to cover expenses and a profit margin
a. I, II, III, and IV
b. I, II, and III
c. I and IV only
d. II and III only
How should significant non-cash transactions be reported in the statement of cash flows?
a. They should be incorporated in the statement of cash flows in a section labeled,
"Significant Noncash Transactions."
O b. Such transactions should be incorporated in the section (operating, financing, or
investing) that is most representative of the major component of the transaction.
O c. These noncash transactions are not to be incorporated in the statement of cash
flows. They appear in a note to the financial statements.
O d. They should be handled in a manner consistent with the transactions that affect cash
flows.
What guidance does the Codification provide on the classification of current liabilities?
What guidance does the Codification provide concerning the format of accounting disclosures?
What are the objectives related to the statement of cash flows?
Chapter 12 Solutions
FUNDAMENTALS OF FINANCIAL ACCOUNTING
Ch. 12 - Compare the purposes of the income statement, the...Ch. 12 - Prob. 2QCh. 12 - Prob. 3QCh. 12 - What are the major categories of business...Ch. 12 - Prob. 5QCh. 12 - Describe the types of items used to compute cash...Ch. 12 - Under the indirect method, depreciation expense is...Ch. 12 - Prob. 8QCh. 12 - Explain why a 50,000 increase in inventory during...Ch. 12 - Prob. 10Q
Ch. 12 - As a junior analyst, you are evaluating the...Ch. 12 - Prob. 12QCh. 12 - Prob. 13QCh. 12 - Prob. 14QCh. 12 - (Supplement 12A) How is the sale of equipment...Ch. 12 - Prob. 1MCCh. 12 - Prob. 2MCCh. 12 - Prob. 3MCCh. 12 - Prob. 4MCCh. 12 - Which of the following would not appear in the...Ch. 12 - Prob. 6MCCh. 12 - Prob. 7MCCh. 12 - Prob. 8MCCh. 12 - The total change in cash as shown near the bottom...Ch. 12 - Prob. 10MCCh. 12 - Prob. 1MECh. 12 - Matching Items Reported to Cash Flow Statement...Ch. 12 - Determining the Effects of Account Changes on Cash...Ch. 12 - Computing Cash Flows from Operating Activities...Ch. 12 - Prob. 5MECh. 12 - Computing Cash Flows from Investing Activities...Ch. 12 - Computing Cash Flows from Financing Activities...Ch. 12 - Computing Cash Flows Under IFRS Using the data...Ch. 12 - Prob. 9MECh. 12 - Interpreting Cash Flows from Operating, Investing,...Ch. 12 - Matching Items Reported to Cash Flow Statement...Ch. 12 - Computing Cash Flows from Operating Activities...Ch. 12 - Prob. 13MECh. 12 - Matching items Reported to Cash Flow Statement...Ch. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Prob. 4ECh. 12 - Prob. 5ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Reporting and Interpreting Cash Flows from...Ch. 12 - Prob. 10ECh. 12 - Prob. 11ECh. 12 - Inferring Balance Sheet Changes from the Cash Flow...Ch. 12 - Prob. 13ECh. 12 - Prob. 14ECh. 12 - Prob. 15ECh. 12 - Prob. 16ECh. 12 - Prob. 17ECh. 12 - Prob. 18ECh. 12 - Prob. 19ECh. 12 - Prob. 20ECh. 12 - Prob. 21ECh. 12 - Prob. 22ECh. 12 - (Supplement 12B) Preparing a Statement of Cash...Ch. 12 - Determining Cash Flow Statement Effects of...Ch. 12 - Prob. 2CPCh. 12 - Prob. 3CPCh. 12 - Preparing and Interpreting a Statement of Cash...Ch. 12 - Prob. 5CPCh. 12 - Prob. 6CPCh. 12 - (Supplement 12A) Preparing and Interpreting a...Ch. 12 - Prob. 1PACh. 12 - Prob. 2PACh. 12 - Prob. 3PACh. 12 - Preparing and Interpreting a Statement of Cash...Ch. 12 - Computing Cash Flows from Operating Activities...Ch. 12 - Prob. 6PACh. 12 - (Supplement 12A) Preparing and Interpreting a...Ch. 12 - Prob. 1PBCh. 12 - Prob. 2PBCh. 12 - Prob. 3PBCh. 12 - Preparing and Interpreting a Statement of Cash...Ch. 12 - Prob. 5PBCh. 12 - Prob. 6PBCh. 12 - Prob. 1SDCCh. 12 - Prob. 2SDCCh. 12 - Prob. 6SDCCh. 12 - Prob. 7SDCCh. 12 - Prob. 8SDCCh. 12 - Prob. 9SDCCh. 12 - Prob. 1CC
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- Would there ever be activities that relate to operating, investing, or financing activities that would not be reported in their respective sections of the statement of cash flows? Explain. If a company had any such activities, how would they be reported in the financial statements, if at all?arrow_forwardWhich of the following statements is false? A. Noncash activities should be reported in accrual basis financial statements. B. Net cash flow from operating activities relates to normal business operations. C. Net income usually equals net cash flow from operating activities. D. The statement of cash flows is an essential part of the basic financial statements.arrow_forwardClassification of Cash Flows A company's statement of cash flows and the accompanying schedule of investing and financing activities not affecting cash may contain the following major sections: a. Operating Activities b. Investing Activities c. Financing Activities d. Investing and Financing Activities not Affecting Cash The following is a list of items that might appear on a company's statement of cash flows or in the accompanying schedule. Required: Using the letters A through D, indicate in which section of the statement of cash flows (or the accompanying schedule) the preceding item would most likely be classified. After each letter, indicate with a plus (+) or a minus () whether the item would be reported on the statement (or the accompanying schedule).arrow_forward
- 1. Which of the following will not be classified under operating activities in a cash flow statements?a. Cash receipts from sale of goods or rendering of services.b. Cash receipts from sale of equity and debt instruments of other entities held primarily for the purpose of being traded.c. Cash receipts from sale of equity instruments representing interests in joint ventures.d. Cash payments to employees for short-term employee benefits. 2. Which of the following is a correct computation of cash flows from operation using the indirect method? a. Profit less depreciation expense, add increase in accounts receivable, less increase in accounts payable. b. Profit less depreciation expense, add decrease in accounts receivable, deduct increase in accounts payable. c. Profit add depreciation expense, add decrease in accounts receivable, deduct increase in accounts payable. d. Profit add depreciation expense, add decrease in accounts receivable, less decrease in…arrow_forwardWhich of the following items would not appear in thefinancing section of the statement of cash flows?a. The issuance of the company’s own stock.b. The repayment of debt.c. The payment of dividends.d. All of the above would appear in the financing sectionof the statement of cash flows.arrow_forward1. According to PAS 7, which of the following statement is incorrect? * a. Statement of Cash Flows requires an entity to present a statement of cash flows as an integral part of its primary financial statements b. Investing and financing transactions which do not require the use of cash should be excluded from the statement of cash flows, but they should be separately disclosed elsewhere in the financial statements c. Cash flows under operating activities are classified and presented either using the 'direct' or 'indirect' method d. None. All of the above statements are correctarrow_forward
- Which statement is incorrect? A. An entity shall report cash flows from operating activities either using direct or indirect method. B. Interest payments to lenders should be classified as cash outflows for financing activities. C. Cash receipts from commissions and other revenues are cash flows from operating activities. D. The aggregate cash flows arising from acquisition of subsidiary should be classified as investing activities.arrow_forwardThe following are several transactions and events that might be disclosed on a company's statement of cash flows: Required: Identify in which section (if any) of the statement of cash flows each of the preceding items would appear and indicate whether it would be reported as an inflow (addition) or an outflow (subtraction). a. Declaration of cash dividends Financing activities: outflow (subtraction) b. Decrease in account payable Operating activities: outflow (subtraction) c. Decrease in account receivable Operating activities: inflow (addition) d. Depletion expense e. Gain on the sale of land f. Increase in inventories g. Payment of cash dividends h. Issuance of preferred stock i. Net income j. Purchase of equipmentarrow_forwardWhich of the following returns is consistent with contractual cash flows that are SPPI? Return for passage of time. Return for the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Return for the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Return for amounts to cover expenses and a profit margin. Group of answer choices I, II and III only I and IV only I, II, III and IV II and III onlyarrow_forward
- 1. What is the purpose of a statement of cash flows? How does it differ from a balance sheet and an income statement? 2. Difference between operating activities, investing activities, and financing activities. 3. What is the purpose of a free cash flow analysis? 4. What are some of the techniques of disclosure for the balance sheet? 5. What is a “Summary of Significant Accounting Policies”?arrow_forwardStatement of projected future cash flows is least likely be required by SECP for a company filing for registration. Why?arrow_forwardIs it true or not? An entity shall prepare all its financial statements, except the statement for cash flow information, using the accrual basis of accounting.arrow_forward
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