Chapter 14: Q14-3RQ (page 768)
Question: Describe the three basic types of cash flow activities.
Answer
The three basic types of cash flow activities are operating activity, investing activity, and financing activity.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Question: What accounts on the balance sheet must be evaluated when completing the investing activities section of the statement of cash flows?
Use the Rouse Exercise Equipment data in Exercises E14-23 and E14-24. Rouse plansto purchase a truck for \(23,000 and a forklift for \)125,000 next year. In addition, itplans to pay cash dividends of $3,500. Assuming Rouse plans similar activity for 2019,what would be the amount of free cash flow?
Using a spreadsheet to prepare the statement of cash flows—indirect method Use the Boost Plus, Inc. data in Exercise E14-21 to prepare the spreadsheet for the 2018 statement of cash flows. Format cash flows from operating activities by the indirect method.
Computing operating activities cash flow—indirect method
The accounting records of CD Sales, Inc. include the following accounts: Account Beginning Balance Ending Balance Cash \( 7,500 \) 6,500 Accounts Receivable 21,000 17,500 Merchandise Inventory 20,000 30,000 Accounts Payable 15,000 19,000 Accumulated Depreciation— Equipment
2,000 Depr. Exp.
56,000 Jul. 1
58,000 Jul. 31
Retained Earnings
Dividends 15,000
63,000 Jul. 1
50,000 Net Inc.
98,000 Jul. 31
Compute CD’s net cash provided by (used for) operating activities during July 2018. Use the indirect method.
Question: Classifying items on the indirect statement of cash flows
Destiny Corporation is preparing its statement of cash flows by the indirect method. Destiny has the following items for you to consider in preparing the statement:
a. Increase in accounts payable
b. Payment of dividends
c. Decrease in accrued liabilities
d. Issuance of common stock
e. Gain on sale of building
f. Loss on sale of land
g. Depreciation expense
h. Increase in merchandise inventory
i. Decrease in accounts receivable
j. Purchase of equipment
Identify each item as a(n): • Operating activity—addition to net income (O+) or subtraction from net income (O-) • Investing activity—cash inflow (I+) or cash outflow (I-) • Financing activity—cash inflow (F+) or cash outflow (F-) • Activity that is not used to prepare the indirect statement of cash flows (N)
What do you think about this solution?
We value your feedback to improve our textbook solutions.
