Understanding Cash Flow Statements

6 questions

1. 1. We have the following information about a company's cash disbursements during the year:

   • Interest payments on bonds payable: $500,000

   • Dividend payments to shareholders: $200,000

   • Payment to acquire 1,000 shares of another company's common stock: $100,000

   Calculate the company's total cash outflows for financing activities in its statement of cash flows under U.S. GAAP?

   $200,000 $700,000 $800,000
2. 2. A company calculated the following data for the period:

   • Cash received from customers: $25,000

   • Cash received from sale of equipment: $1,000

   • Interest paid on bonds payable: $3,000

   • Cash paid to employees: $8,000.

   What amount should the company report as net cash provided by operating activities in its statement of cash flows under US GAAP?

   $14,000 $15,000 $26,000
3. 3. Under the indirect method of preparing cash flow statement, which of the following should be included in operating activities?
   Gain on sale of plant asset. Sale of property, plant and equipment. Payment of cash dividend to the shareholders.
4. 4. Which of the following will be classified as operating cash flow under US GAAP?
   Change in notes payableSale of landSale of inventory
5. 5. Which of the following is not an example of an operating cash flow under US GAAP?
   Taxes paidSale of obsolete equipmentDividend received from investment
6. 6. How is the depreciation expense classified under cash flow statement?
   Operating cash flowInvesting cash flowNo cash flow impact