Which of the following is included in the financing activities section of the statement of cash flows?

Question: The primary purpose of a Statement of Cash Flows is to provide relevant information about A. Differences between net income and associated cash receipts and disbursements. B. An enterprise's ability to generate future positive net cash flows. C. The cash receipts and cash disbursements of an enterprise during a period. D. An enterprise's ability to meet cash operating needs.

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Question: The primary purpose of a Statement of Cash Flows is to provide relevant information about A. Differences between net income and associated cash receipts and disbursements. B. An enterprise's ability to generate future positive net cash flows. C. The cash receipts and cash disbursements of an enterprise during a period. D. An enterprise's ability to meet cash operating needs.
Answer: C. The cash receipts and cash disbursements of an enterprise during a period.Explanation: This question provides an example of the need to read each answer alternative very carefully before choosing.The Statement of Cash Flows is a listing of cash flows for a period in meaningful categories. Thus, it depicts the major cash receipts and disbursements during a period. Although such information may help a user to assess the ability of a firm to generate future cash flows, it does not, necessarily, say anything about the firm's ability to do so in the future.Similarly, the cash flow statement does not directly indicate the firm's ability to meet future cash operating needs. The reconciliation of income and net operating cash flows does indicate the differences between income and operating cash flows, but this is not the primary purpose of the statement.
Question: Bay Manufacturing Co. purchased a three-month U.S. Treasury bill. In preparing Bay's Statement of Cash Flows, this purchase would:
Answer: A. Have no effect. Explanation: The three-month bill meets the definition of a cash equivalent. Three months is the maximum original maturity under the definition. Cash and cash equivalents are the reporting basis of the Statement of Cash Flows. Cash decreased but cash equivalents increased the same amount as a result of this purchase. Thus, there is no net effect on cash and cash equivalents. Therefore, there is nothing to report in the Statement of Cash Flows.
Question: New England Co. had net cash provided by operating activities of $351,000; net cash used by investing activities of $420,000; and cash provided by financing activities of $250,000.New England's cash balance was $27,000 on January 1. During the year, there was a sale of land that resulted in a gain of $25,000, and proceeds of $40,000 were received from the sale.What was New England's cash balance at the end of the year?
Answer: C. $208,000 Explanation: The cash balance at the end of the year equals the cash balance at the beginning of the year, $27,000, plus the net sum of the three categories of cash flows: $351,000 operating - $420,000 investing + $250,000 financing. The ending balance is $208,000.The $40,000 proceeds from land sale are included in the net cash outflow from investing activities.
Question: Paper Co. had net income of $70,000 during the year. The dividend payment was $10,000. The following information is available:Mortgage repayment $20,000Available-for-sale securities purchased 10,000 increaseBonds payable-issued 50,000 increase Inventory 40,000 increaseAccounts payable 30,000 decreaseWhat amount should Paper report as net cash provided by operating activities in its Statement of Cash Flows for the year?
Answer: A. $0Explanation: Operating Activities come from adjustments to reconcile net income to net cash flows and through analyzing the change in current asset and liability accounts. Net income - increase in inventory - decrease in accounts payable $70.000 - $40 000 - $30 000 = $0
Question: Which of the following items is included in the Financing Activities section of the Statement of Cash Flows?
Answer: C. Cash effects of transactions obtaining resources from owners and providing them with a return on their investment.Explanation: Financing cash flows are those between the firm and the parties providing it with debt and equity financing. Financing cash flows are the major sources of nonoperating cash inflows and repayments of those amounts to the providers. For example, borrowings and proceeds from stock issuance, retirements of debt, treasury stock purchases, and dividends paid are all financing cash flows. Interest paid, however, is an operating cash flow.
Question: A company acquired a building, paying a portion of the purchase price in cash and issuing a mortgage note payable to the seller for the balance.In a Statement of Cash Flows, what amount is included in investing activities for the above transaction?
Answer: A. Cash payment.Explanation: The amounts paid to purchase plant assets and passive investments, such as stocks and bonds from other firms, are investing cash outflows. When part of the purchase price is financed, as in this question, only the cash amount paid is disclosed in the Statement of Cash Flows. The non-cash activity schedule would disclose the acquisition price and amount financed with the mortgage.
Question: A company acquired a building, paying a portion of the purchase price in cash and issuing a mortgage note payable to the seller for the balance.In a Statement of Cash Flows for the purchasing company, what amount is included in financing activities for the above transaction?
Answer: C. Zero.Explanation: The cash payment is an investing cash outflow, not a financing cash flow. The transaction would show no entry in the financing section of the Statement of Cash Flows.The payment amount (only) would be reported in the investing activity section of the Statement of Cash Flows as an outflow.
Question: In a Statement of Cash Flows, which of the following items is reported as a cash outflow from financing activities?I. Payments to retire mortgage notes;II. Interest payments on mortgage notes;or III. Dividend payments.
Answer: D. I and III.Explanation: Both I and III are financing cash outflows. Principal payments on loans from financial institutions are financing because they are a return of a source of long-term financing.The dividends are a return to shareholders who have provided a considerable portion of total firm financing.
Question: On December 31, 20x1, Deal, Inc. failed to accrue the December 20x1 sales salaries that were payable on January 6, 20x2.What is the effect of the failure to accrue sales salaries on working capital and cash flows from operating activities in Deal's 20x1 financial statements?
Answer: Working capital is overstated - Cash flows from operating activities has no effectExplanation: Failure to accrue salaries at the end of 20x1 understates salaries payable, a current liability. Working capital equals current assets minus current liabilities. With current liabilities understated, working capital is overstated.The accrued salaries at the end of 20x1 would not have been paid in 20x1, even if they had been accrued correctly. Therefore, 20x1 operating cash flows are not affected by the failure to accrue the salaries.
Question: Deed Co. owns 2% of Beck Cosmetic Retailers. A property dividend by Beck consisted of merchandise with a fair value lower than the listed retail price. Deed, in turn, gave the merchandise to its employees as a holiday bonus.How should Deed report the receipt and distribution of the merchandise in its Statement of Cash Flows?
Answer: D. As a non-cash activity.Explanation: The property dividend is not a cash flow nor is the distribution of the property to the employees a cash flow.
Question: Polk Co. acquires a forklift from Quest Co. for $30,000. The terms require Polk to pay $3,000 down and finance the remaining $27,000. On March 1, year 1, Polk pays the $3,000 down and accepted delivery of the forklift. Polk signed a note that requires Polk to pay principal payments of $1,000 per month for 27 months beginning July 1, year 1. What amount should Polk report as an investing activity in the statement of cash flows for the year ended December 31, year 1?
Answer: A. $3,000Explanation: Only actual cash inflows and outflows are presented on the statement of cash flows. In this case, Polk paid $3,000 in cash as a down payment for the forklift and financed the remainder of the purchase price. Therefore, the only cash outlay as an investing activity on the statement of cash flows is $3,000. The cash outflows associated with the payment on the note would be classified as a financing activity.
Question: Which of the following transactions is included in the operating activities section of a cash flow statement prepared using the indirect method? A. Gain on sale of plant asset. B. Sale of property, plant and equipment.C. Payment of cash dividend to the shareholders. D. Issuance of common stock to the shareholders.
Answer: A. Gain on sale of plant asset. Explanation: The gain on the sale of a plant asset is a noncash item that is used to reconcile net income to cash flows from operations.
Question: Abbott Co. is preparing its Statement of Cash Flows for the year. Abbott's cash disbursements during the year included the following:Payment of interest on bonds payable $500,000Payment of dividends to stockholders 300,000Payment to acquire 1,000 shares of Marks Co. common stock 100,000What should Abbott report as total cash outflows for financing activities in its Statement of Cash Flows?
Answer: B. $300,000Explanation: Dividends paid to shareholders are a financing activity. The payment of interest on bonds is an operating activity, and payments to acquire shares of Marks Co. stock are investing activities.
Question: A company calculated the following data for the period:Cash received from customers $25,000Cash received from sale of equipment 1,000Interest paid to bank on note 3,000Cash paid to employees 8,000What amount should the company report as net cash provided by operating activities in its Statement of Cash Flows?
Answer: A. $14,000Explanation: Cash received from the customers and paid to employees are operating activities. Interest paid on a bank note is also an operating activity. Therefore, the cash for from operating activities is $25,000 - 3,000 - 8,000 = $14,000.
Question: A company is preparing its year-end cash flow statement using the indirect method. During the year, the following transactions occurred:Dividends paid $300Proceeds from the issuance of common stock $250Borrowings under a line of credit $200Proceeds from the issuance of convertible bonds $100Proceeds from the sale of a building $150What is the company's increase in cash flows provided by financing activities for the year?
Answer: C. $250Explanation: Cash flows from financing activities are those associated with how the company is financed such as with borrowing or equity. Therefore, the proceeds from the sale of the building would not be included in financing activities. The proceeds from the issuance of common stock (250), convertible bonds (100) and borrowing on the line of credit (200) are all cash inflows from financing activities. The payment of dividends (300) is a cash outflow from financing activities. 250 + 100 + 200 - 300 = 250.
Cash Flows from Operating Activities
Inflows (Cash Received) Outflows (Cash Paid)From Customers To Suppliers (Goods/Services)Dividends (from Investment) To Employees (Payroll)Interest Interest Income taxes
Cash Flows from Investing Activities
Inflows (Cash Received)Sale of Long-term Assets Collection of Loan PrincipalDisposal of Debt and Equity Securities (of others) (Held-to-Maturity and Available-for-Sale Classifications)Sale of Other Productive Assets (e.g., Patent; but not Inventory)Outflows (Cash Paid)Purchase of Long-term AssetsLending (to others)Investment in Debt and Equity Securities (of others) (Held-to-Maturity and Available-for-Sale Classifications)Purchase of Other Productive Assets (e.g., Patent; but not Inventory)
Cash Flows from Financing Activities
Inflows (Cash Received) Outflows (Cash Paid)Sale of (Own) Stock Repurchase Own (Treasury) StockProceeds from Borrowing (Bonds, Notes, etc.) is Inflow Paying Back Lenders (Principal Only) Payment of Dividends
Which of the following are included in the financing section of the cash flow statement?
What is included in financing activities cash flow?
What is included in the financing activities section of the statement of cash flows quizlet?
Which of the following is included in the investing activities section of the statement of cash flows?

Answer: C. The cash receipts and cash disbursements of an enterprise during a period.Explanation: This question provides an example of the need to read each answer alternative very carefully before choosing.The Statement of Cash Flows is a listing of cash flows for a period in meaningful categories. Thus, it depicts the major cash receipts and disbursements during a period. Although such information may help a user to assess the ability of a firm to generate future cash flows, it does not, necessarily, say anything about the firm's ability to do so in the future.Similarly, the cash flow statement does not directly indicate the firm's ability to meet future cash operating needs. The reconciliation of income and net operating cash flows does indicate the differences between income and operating cash flows, but this is not the primary purpose of the statement.

Question: Bay Manufacturing Co. purchased a three-month U.S. Treasury bill. In preparing Bay's Statement of Cash Flows, this purchase would:

Answer: A. Have no effect. Explanation: The three-month bill meets the definition of a cash equivalent. Three months is the maximum original maturity under the definition. Cash and cash equivalents are the reporting basis of the Statement of Cash Flows. Cash decreased but cash equivalents increased the same amount as a result of this purchase. Thus, there is no net effect on cash and cash equivalents. Therefore, there is nothing to report in the Statement of Cash Flows.

Question: New England Co. had net cash provided by operating activities of $351,000; net cash used by investing activities of $420,000; and cash provided by financing activities of $250,000.New England's cash balance was $27,000 on January 1. During the year, there was a sale of land that resulted in a gain of $25,000, and proceeds of $40,000 were received from the sale.What was New England's cash balance at the end of the year?

Answer: C. $208,000 Explanation: The cash balance at the end of the year equals the cash balance at the beginning of the year, $27,000, plus the net sum of the three categories of cash flows: $351,000 operating - $420,000 investing + $250,000 financing. The ending balance is $208,000.The $40,000 proceeds from land sale are included in the net cash outflow from investing activities.

Question: Paper Co. had net income of $70,000 during the year. The dividend payment was $10,000. The following information is available:Mortgage repayment $20,000Available-for-sale securities purchased 10,000 increaseBonds payable-issued 50,000 increase Inventory 40,000 increaseAccounts payable 30,000 decreaseWhat amount should Paper report as net cash provided by operating activities in its Statement of Cash Flows for the year?

Answer: A. $0Explanation: Operating Activities come from adjustments to reconcile net income to net cash flows and through analyzing the change in current asset and liability accounts. Net income - increase in inventory - decrease in accounts payable $70.000 - $40 000 - $30 000 = $0

Question: Which of the following items is included in the Financing Activities section of the Statement of Cash Flows?

Answer: C. Cash effects of transactions obtaining resources from owners and providing them with a return on their investment.Explanation: Financing cash flows are those between the firm and the parties providing it with debt and equity financing. Financing cash flows are the major sources of nonoperating cash inflows and repayments of those amounts to the providers. For example, borrowings and proceeds from stock issuance, retirements of debt, treasury stock purchases, and dividends paid are all financing cash flows. Interest paid, however, is an operating cash flow.

Question: A company acquired a building, paying a portion of the purchase price in cash and issuing a mortgage note payable to the seller for the balance.In a Statement of Cash Flows, what amount is included in investing activities for the above transaction?

Answer: A. Cash payment.Explanation: The amounts paid to purchase plant assets and passive investments, such as stocks and bonds from other firms, are investing cash outflows. When part of the purchase price is financed, as in this question, only the cash amount paid is disclosed in the Statement of Cash Flows. The non-cash activity schedule would disclose the acquisition price and amount financed with the mortgage.

Question: A company acquired a building, paying a portion of the purchase price in cash and issuing a mortgage note payable to the seller for the balance.In a Statement of Cash Flows for the purchasing company, what amount is included in financing activities for the above transaction?

Answer: C. Zero.Explanation: The cash payment is an investing cash outflow, not a financing cash flow. The transaction would show no entry in the financing section of the Statement of Cash Flows.The payment amount (only) would be reported in the investing activity section of the Statement of Cash Flows as an outflow.

Question: In a Statement of Cash Flows, which of the following items is reported as a cash outflow from financing activities?I. Payments to retire mortgage notes;II. Interest payments on mortgage notes;or III. Dividend payments.

Answer: D. I and III.Explanation: Both I and III are financing cash outflows. Principal payments on loans from financial institutions are financing because they are a return of a source of long-term financing.The dividends are a return to shareholders who have provided a considerable portion of total firm financing.

Question: On December 31, 20x1, Deal, Inc. failed to accrue the December 20x1 sales salaries that were payable on January 6, 20x2.What is the effect of the failure to accrue sales salaries on working capital and cash flows from operating activities in Deal's 20x1 financial statements?

Answer: Working capital is overstated - Cash flows from operating activities has no effectExplanation: Failure to accrue salaries at the end of 20x1 understates salaries payable, a current liability. Working capital equals current assets minus current liabilities. With current liabilities understated, working capital is overstated.The accrued salaries at the end of 20x1 would not have been paid in 20x1, even if they had been accrued correctly. Therefore, 20x1 operating cash flows are not affected by the failure to accrue the salaries.

Question: Deed Co. owns 2% of Beck Cosmetic Retailers. A property dividend by Beck consisted of merchandise with a fair value lower than the listed retail price. Deed, in turn, gave the merchandise to its employees as a holiday bonus.How should Deed report the receipt and distribution of the merchandise in its Statement of Cash Flows?

Answer: D. As a non-cash activity.Explanation: The property dividend is not a cash flow nor is the distribution of the property to the employees a cash flow.

Question: Polk Co. acquires a forklift from Quest Co. for $30,000. The terms require Polk to pay $3,000 down and finance the remaining $27,000. On March 1, year 1, Polk pays the $3,000 down and accepted delivery of the forklift. Polk signed a note that requires Polk to pay principal payments of $1,000 per month for 27 months beginning July 1, year 1. What amount should Polk report as an investing activity in the statement of cash flows for the year ended December 31, year 1?

Answer: A. $3,000Explanation: Only actual cash inflows and outflows are presented on the statement of cash flows. In this case, Polk paid $3,000 in cash as a down payment for the forklift and financed the remainder of the purchase price. Therefore, the only cash outlay as an investing activity on the statement of cash flows is $3,000. The cash outflows associated with the payment on the note would be classified as a financing activity.

Question: Which of the following transactions is included in the operating activities section of a cash flow statement prepared using the indirect method? A. Gain on sale of plant asset. B. Sale of property, plant and equipment.C. Payment of cash dividend to the shareholders. D. Issuance of common stock to the shareholders.

Answer: A. Gain on sale of plant asset. Explanation: The gain on the sale of a plant asset is a noncash item that is used to reconcile net income to cash flows from operations.

Question: Abbott Co. is preparing its Statement of Cash Flows for the year. Abbott's cash disbursements during the year included the following:Payment of interest on bonds payable $500,000Payment of dividends to stockholders 300,000Payment to acquire 1,000 shares of Marks Co. common stock 100,000What should Abbott report as total cash outflows for financing activities in its Statement of Cash Flows?

Answer: B. $300,000Explanation: Dividends paid to shareholders are a financing activity. The payment of interest on bonds is an operating activity, and payments to acquire shares of Marks Co. stock are investing activities.

Question: A company calculated the following data for the period:Cash received from customers $25,000Cash received from sale of equipment 1,000Interest paid to bank on note 3,000Cash paid to employees 8,000What amount should the company report as net cash provided by operating activities in its Statement of Cash Flows?

Answer: A. $14,000Explanation: Cash received from the customers and paid to employees are operating activities. Interest paid on a bank note is also an operating activity. Therefore, the cash for from operating activities is $25,000 - 3,000 - 8,000 = $14,000.

Question: A company is preparing its year-end cash flow statement using the indirect method. During the year, the following transactions occurred:Dividends paid $300Proceeds from the issuance of common stock $250Borrowings under a line of credit $200Proceeds from the issuance of convertible bonds $100Proceeds from the sale of a building $150What is the company's increase in cash flows provided by financing activities for the year?

Answer: C. $250Explanation: Cash flows from financing activities are those associated with how the company is financed such as with borrowing or equity. Therefore, the proceeds from the sale of the building would not be included in financing activities. The proceeds from the issuance of common stock (250), convertible bonds (100) and borrowing on the line of credit (200) are all cash inflows from financing activities. The payment of dividends (300) is a cash outflow from financing activities. 250 + 100 + 200 - 300 = 250.

Cash Flows from Operating Activities

Inflows (Cash Received) Outflows (Cash Paid)From Customers To Suppliers (Goods/Services)Dividends (from Investment) To Employees (Payroll)Interest Interest Income taxes

Cash Flows from Investing Activities

Inflows (Cash Received)Sale of Long-term Assets Collection of Loan PrincipalDisposal of Debt and Equity Securities (of others) (Held-to-Maturity and Available-for-Sale Classifications)Sale of Other Productive Assets (e.g., Patent; but not Inventory)Outflows (Cash Paid)Purchase of Long-term AssetsLending (to others)Investment in Debt and Equity Securities (of others) (Held-to-Maturity and Available-for-Sale Classifications)Purchase of Other Productive Assets (e.g., Patent; but not Inventory)

Cash Flows from Financing Activities

Inflows (Cash Received) Outflows (Cash Paid)Sale of (Own) Stock Repurchase Own (Treasury) StockProceeds from Borrowing (Bonds, Notes, etc.) is Inflow Paying Back Lenders (Principal Only) Payment of Dividends

Which of the following are included in the financing section of the cash flow statement?

The financing activity in the cash flow statement focuses on how a firm raises capital and pays it back to investors through capital markets. These activities also include paying cash dividends, adding or changing loans, or issuing and selling more stock.

What is included in financing activities cash flow?

What is Cash Flow from Financing Activities? Cash Flow from Financing Activities is the net amount of funding a company generates in a given time period. Finance activities include the issuance and repayment of equity, payment of dividends, issuance and repayment of debt, and capital lease obligations.

What is included in the financing activities section of the statement of cash flows quizlet?

The financing activities section of the statement of cash flows (SCF) involves cash flows from issuing and repaying debt or equity to finance the company. Typical debt transactions include proceeds from borrowings and principal repayments of debt (eg, lease liability).

Which of the following is included in the investing activities section of the statement of cash flows?

The activities included in cash flow from investing actives are capital expenditures, lending money, and the sale of investment securities. Along with this, expenditures in property, plant, and equipment fall within this category as they are a long-term investment.

Financing activities examples Cash flow statement