ID: A 10. On the statement of cash flows prepared by the indirect method, the ca
ID: 2596948 • Letter: I
Question
ID: A 10. On the statement of cash flows prepared by the indirect method, the cash flows from operating section would include a. receipts from the sale of investments b. amortization of premium on bonds payable c. payments for cash dividends d. receipts from the issuance of capital stock On the statement of cash flows prepared by the indirect method, a $50,000 gain on the sale of investments would be 11. a. deducted from net income in converting the net income reported on the income statement to cash flows from operating activities b. added to net income in converting the net income reported on the income statement to cash flows from operating activities added to dividends declared in converting the dividends declared to the cash flows from c. financing activities related to dividends d. deducted from dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends Accounts receivable from sales transactions were $$1,000 at the beginning of the year and $64,000 at the end of the year. Net income reported on the income statement for the year was S105,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method is a. $105,000 b. $118,000 c. $92,000 d. $169,000 12. The net income reported on the income statement for the current year was $275,000. on fixed assets and amortization of patents for the year were $40,000 and S9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows: 13. Depreciation recorded Cash Accounts receivable Inventories Prepaid expenses Accounts payable (merchandise creditors) End Beginning S 50,000 60,000 108,000 93,000 6,500 89,000 112,000 105,000 4,500 75,000 What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method? a. $198,000 b. $324,000 c. $352,000 d. $296,000Explanation / Answer
Question No: 10 Answer is option (b) Amortisation of premium on Bonds payable Receipts from Sale of investments -- Investing Activity payment of Dividend and Receipts from issue of Capital stock are Financing actiivity Amortisation of premium on Bonds payable - Operating Activity : This item is added to Net income as Non cash item Question no:11 Answer is option :(A) Dedcuted from the net income in converting the net Income reported on the income statement to cash flows from operating activities Sale of iinvestment is An investing activity, proceeds from Sale of investmnets are added in investing Actvities. Gain on this sale deducted from net income to derive from cash flow from net Operatng activities Question No:12 Answer is option (C ) $92000 Amount in $ Net income 105000 Increse in Account receivables -13000 (64000-51000) cash flow from operating activities 92000 Question :13 Answer is option (D) $296,000 Amount in $ net income 275000 Add: Depreciation 40000 Add: amortisation 9000 increse in Account receivables (112000-108000 -4000 4 Increse in inventories (105000-93000) -12000 Decrese in prepaid Expenses (4500-6500) 2000 Decrese in account payables (75000-89000) -14000 Cash flow from operating activities 296000