Problem 1:
All of the following statements apply to the statement of cash flows covering a given period. If a statement applies only to the direct format, write D in the space allowed. If a statement applies only to the indirect format, write I in the space allowed. If a statement applies to both formats, write a B in the space allowed
a. The amount of cash received from customers
b. A purpose of the statement is to reconcile the amount of cash generated by operating activities to the amount of net income generated by operating activities.
c. The amount by which cash receipts from customers differed from sales reported
d. Certain revenues and expenses that did not generate or consume cash are listed.
e. The amount of net income is listed on the face of the statement
f. The amount of cash paid to suppliers of inventory in included
g. The amount of cash paid for taxes is reported
h. The amount of cash raised from selling bonds to investors is listed of the face of the statement
i. The purpose of the statement is to reveal the amount of cash received from or paid out for specific operating activities
j. The amount of cash paid to acquire land and buildings is included
Problem 2: Each of the items found below might appear on a statement of cash flow.
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Statement section
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Statement format
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Added or subtracted
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1
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Decrease in taxes payable
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2
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Cash paid to suppliers of inventory
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3
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Dividends declared and paid
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4
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Deprecation expenses
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5
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Sale of stock
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6
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Increase in accounts payable
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7
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Cash collected from customers
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8
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Purchase of plant assets
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9
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Payments on long-term debt
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10
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Cash paid for taxes
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11
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increase in wages payable
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12
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Purchase of treasury stock
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For each item, indicate answers as shown.
A. Would it appear on the statement of cash flows under the operating activities (O), investing activities (I), or Financing activities (F) section?
B. Would it appear in the direct format (D), indirect format (I) or both formats (B)?
C. Would it be added (+) or subtracted (-) in computing cash flow?
Problem 3: Use the information provided in each of the following independent situations to answer the question. For each situation, briefly explain the reasoning behind each of your calculations.
A. Net cash flow from operations for a period was $30,000. Noncash revenues for the period were $11,000. Noncash expenses for the period were $13,200. What was the net income for the period?
B. Wage expense for a period was $69,000. Wages payable increased during the period by 10,500. How much was paid to employees during the period?
C. Cash collected from customers for a fiscal period was $224,500. Sales revenue for the period was $241,000. Accounts receivable at the beginning of the period was $36,000. What was the balance in accounts receivable at the end of the period?
D. Net income for a period was $45,000. Current assets increase during this period by $7,500. Current liabilities increased during the period by $10,000. How much cash flow from operations for the period?
Problem 4: The following information was reported by The Boeing Company in its 2004 annual report (in millions of dollars).
Decrease in inventories 611.00
Increase in prepaid expenses 4355.00
Depreciation and amortization 1412.00
Increase in accounts Payable 862.00
Increase in accounts Receivable 241.00
Increase in income taxes payable 1086.00
Net earnings 3458.00
Other additional to net income 625.00
What was Boeing’s cash flow from operation activities for the fiscal year?