Treatment of Noncash Exchanges. The acquisition of equipment by assum- ing a mortgage is a transaction that firms cannot report in their statement of cash flows but must report in a supplemental schedule or note. Of what value is information about this type of transaction? What is the reason for its exclusion from the statement of cash flows?

Treatment of Noncash Exchanges. The acquisition of equipment by assum- ing a mortgage is a transaction that firms cannot report in their statement of cash flows but must report in a supplemental schedule or note. Of what value is information about this type of transaction? What is the reason for its exclusion from the statement of cash flows?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 11Q: Note payments reduce cash and are related to long-term debt. Do these facts automatically lead to...

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Treatment of Noncash Exchanges. The acquisition of equipment by assuming a mortgage is a transaction that firms cannot report in their statement of cash flows but must report in a supplemental schedule or note. Of what value is information about this type of transaction? What is the reason for its exclusion from the statement of cash flows? Please explain without copying from another source.
Which of the following is essentially unsecured? A• Certificate deposits B• Treasury bills C• Commercial papers D• Repurchase agreement
1. This is a financial asset that is usually in the form of a negotiable instrument that holds monetary value and it can be converted into cash through established market or over-the-counter. a. Short-term receivables b. Long-term assets O c. Cash equivalents d. Financial security e. None of the above
Which of the following is not a primary function of Money? a. All the options are correct b. Alternative source of repayment c. Measure of value d. Medium of exchange
An investment made in a fixed asset is similar to an investment made by a bank when it lends money. True or false?
Which of the following circumstances would result in an increase in cash from operations but not an increase in net income? Select one: a. None of the other choices is correct b. The failure to take advantage of a purchase discount offered by the supplier c. The sale of equipment for an amount greater than its book value d. The reissuance of treasury stock for an amount greater than its cost e. The issuance of bonds at a premium
QUESTION 2 Accounting for the exchange of assets depends on whether the transaction has commercial substance; an exchange has commercial substance if a company's future cash flows change as a result of the exchange. O True O False
Which of the following is classified as nonmonetary? a. Cash surrender value b. Long-term receivable c. Accrued liability on firm purchase commitment d. Inventory
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
1. Cash is a monetary and financial asset. It is the most liquid finance asset; it is also thestandard medium of exchange for most business transactions. Cash is usuallyclassified as a current account, however there are circumstances in which cash isclassified as a non-current asset. Required:With the aid of a suitable example, explain when can be classified as a non-currentasset.
Which of the following transactions involve the movement of cash? O A provision for obsolete stocks. O A bonus issue. O A provision for doubtful debts. O None of the above.
Why is it advantageous for a company to finance its receivables?