Chapter 04

The Statement of Cash Flows

True / False Questions

1. Amounts held in cash equivalent investments must be reported separately from

amounts held as cash in the statement of cash flows.

True False

2. Generally speaking, cash flows from operating activities include the elements of net
profit or loss reported on a cash basis.

True False

3. If the direct method is used to report cash flows from operating activities in the body
of the statement of cash flows under IFRS, a reconciliation of net profit or loss to net
cash flows from operating activities is also required.

True False

4. Interest payments on debt can only be classified as cash outflows from financing
activities.

True False

5. The purchase of treasury shares is an investing cash outflow.

True False

6. Transactions that represent noncash investing and financing activities must be

reported in the statement of cash flows or in disclosure notes.

True False

7. Cash paid for taxes and interest must be disclosed on the face of the statement or in
the disclosure notes under both the direct and indirect methods of reporting cash
flows from operating activities.

True False

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8. When one enters a $50,000 credit entry to the Land account in a spreadsheet for the
statement of cash flows, it represents a negative change in that account and is
probably due to selling such assets.

True False

9. A decrease in cash dividends payable means that dividends declared were less than
dividends paid.

True False

10. In using a spreadsheet to prepare the statement of cash flows, the summary entries
duplicate the actual journal entries used to record the transactions during the year.

True False

Multiple Choice Questions

11. Creditors and investors would generally find the statement of cash flows least useful
for assessing the ______.

A. ability to generate future cash

flows
B. ability to pay
dividends
C. financial position at a point in
time
D. quality of
earnings

12. When a company purchases a security it considers a cash equivalent, the cash
outflow is ______.

A. reported as an operating
activity
B. reported as an investing
activity
C. reported as a financing
activity
D. not reported on a statement of cash
flows

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13. When preparing a statement of cash flows using the direct method, accrual of payroll
expense is ______.

A. reported as an operating
activity
B. reported as an investing
activity
C. reported as a financing
activity
D. None of
these

14. How is the amortization of patents reported in a statement of cash flows that is
prepared using the direct method?

A. not
reported
B. an increase in cash flows from operating
activities
C. a decrease in cash flows from operating
activities
D. a decrease in cash flows from investing
activities

15. In a statement of cash flows in which operating activities are reported by the direct
method, which of the following could increase reported cash flows from operating
activities?

A. gain on sale of
equipment
B. interest
revenue
C. gain on early extinguishment of
bonds
D. proceeds from sale of
land

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16. Rampart Ltd recorded the following transaction:

Land 15 million
Notes payable 12 million
Cash 3 million

In the statement of cash flows, this would be reported as a ______.

A. $3 million outflow from investing

activities
B. $15 million outflow from investing
activities
C. $3 million outflow from investing activities and $12 million noncash investing and
financing activity
D. none of
these

17. A statement of cash flows and its related disclosure note typically does not report
______.

A. an acquisition of the use of a building with a finance lease

agreement
B. the purchase of treasury
shares
C. bonus issues of shares or share
dividends
D. notes payable issued for a tract of
land

18. Property dividends distributed are reported in connection with a statement of cash
flows as ______.

A. a financing
activity
B. an investing
activity
C. a noncash
activity
D. not reported in the statement of
cash flows

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19. Which of the following is not true regarding the statement of cash flows?

A. The indirect method derives cash flows indirectly by starting with sales revenue
and "working backwards" to convert that amount to a cash basis.
B. Noncash transactions are sometimes reported in conjunction with the
statement.
C. Either the direct or the indirect method can be used to calculate and report the net
cash increase or decrease from operating activities.
D. The statement of cash flows provides information about cash flows that the other
statements either do not provide or provide only indirectly.

20. On December 31, 2022, Wellstone Company reported net profit of $70,000 and sales
of $210,000. The company also reported beginning and ending accounts receivable
at $20,000 and $25,000, respectively. Wellstone will report cash collected from
customers in its 2022 statement of cash flows (direct method) in the amount of
______.

A. $215,00
0
B. $285,00
0
C. $135,00
0
D. $205,00
0

21. Pickering Company's prepaid insurance was $8,000 as of December 31, 2021, and
$10,000 as of December 31, 2022. Pickering reported insurance expense of $15,000
on the 2022 statement of profit or loss. What amount would be reported in the
statement of cash flows as insurance paid using the direct method?

A. $13,00
0
B. $17,00
0
C. $15,00
0
D. $23,00
0

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22. Dooling Corporation reported balances in the following accounts for the current year:

Beginning Ending
Inventories $600 $300
Accounts payable 300 500

Cost of goods sold was $7,500. What was the amount of cash paid to suppliers?

A. $7,00
0
B. $7,20
0
C. $7,30
0
D. $7,50
0

23. Sneed Corporation reported balances in the following accounts for the current year:

Beginning Ending
Income tax payable $50 $30
Deferred tax liability 80 140

Income tax expense was $230 for the year. What was the amount paid for taxes?

A. $28
0
B. $22
0
C. $21
0
D. $19
0

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24. In determining cash flows from operating activities (indirect method), adjustments to
net profit or loss should not include ______.

A. an addition for depreciation

expense
B. an addition for bond discount
amortization
C. an addition for a gain on sale of
equipment
D. an addition for patent
amortization

25. S Company reported net profit for 2022 in the amount of $400,000. The company's
financial statements also included the following:

Increase in accounts receivable $80,000

Decrease in inventory 60,000
Increase in accounts payable 200,000
Depreciation expense 104,000
Gain on sale of land 148,000

What is net cash provided by operating activities under the indirect method?

A. $432,00
0
B. $536,00
0
C. $580,00
0
D. $832,00
0

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26. Which of the following is reported as a deduction from net profit when using the
indirect method to determine net cash flows from operating activities?

A. depreciation
expense
B. amortization of a
patent
C. amortization of premium on bonds
payable
D. dividends
declared

27. Creble Company reported net profit for 2022 in the amount of $40,000. The
company's financial statements also included the following:

Increase in accounts receivable $4,000

Decrease in inventory 2,000
Depreciation expense 3,000
Gain on sale of equipment 5,000

In the statement of cash flows what is net cash provided by operating activities under
the indirect method?

A. $36,00
0
B. $41,00
0
C. $40,00
0
D. $38,00
0

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28. When using the indirect method to determine cash flows from operating activities,
adjustments to net profit or loss should not include ______.

A. an addition for amortization

expense
B. an addition for bond discount
amortization
C. an addition for a
gain
D. an addition for a
loss

29. The net profit for Howie Doohan Corporation was $280 million for the year ended
December 31, 2022. Related information follows:

Sale of ordinary shares for cash, $34 million.

Amortization of trademark, $2 million.
Cash dividends paid, $28 million.
Decrease in salaries payable, $2 million.
Depreciation expense, $40 million.
Increase in accounts payable, $18 million.
Increase in bonds payable, $26 million.

Assume that the company classifies dividends paid as a financing activity. Net cash
flows from operating activities during 2022 should be reported as ______.

A. $302
million
B. $338
million
C. $342
million
D. $364
million

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30. Selected information from Peridot Corporation's accounting records and financial
statements for 2022 is as follows ($ in millions):

Cash paid to acquire machinery $36

Reacquired Peridot ordinary shares 50
Proceeds from sale of land 90
Gain from the sale of land 52
Investment revenue received 66
Cash paid to acquire office equipment 80

Assume that Peridot classifies investment revenue received as an operating activity.

In its statement of cash flows, Peridot should report net cash outflows from investing
activities of ______.

A. $26
million
B. $46
million
C. $72
million
D. $78
million

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31. Selected information from Isadore Bell Corporation's accounting records and financial
statements for 2022 is as follows ($ in millions):

Cash paid to acquire equipment $120

Cash paid to acquire land 54
Treasury shares acquired with cash and then retired 75
Dividend revenue received 66
Gain from the sale of buildings 78
Proceeds from sale of buildings 135

Assume that Isadore Bell classifies dividend received as an operating activity. In its
statement of cash flows, Isadore Bell should report net cash outflows from investing
activities of ______.

A. $39
million
B. $69
million
C. $114
million
D. $117
million

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32. In preparing its statement of cash flows for the year ended December 31, 2022,
Green Co. gathered the following data:

Gain on sale of land $12,000

Proceeds from sale of land 20,000
Purchase of Black Ltd bonds (face value $200,000) 360,000
Amortization of bond discount 4,000
Cash dividends declared 90,000
Cash dividends paid 76,000
Proceeds from sale of Green Co. ordinary shares 150,000

Assume that Green classifies cash dividends as a financing activity. In its December
31, 2022 statement of cash flows, what amount should Green report as net cash from
financing activities?

A. $40,00
0
B. $54,00
0
C. $60,00
0
D. $74,00
0

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33. Selected information from Jacklyn Hyde Corporation's accounting records and
financial statements for 2022 is as follows ($ in millions):

Cash paid to retire notes $90

Common shares acquired for treasury 150
Proceeds from issuance of preference shares 210
Proceeds from issuance of subordinated bonds 270
Cash dividends paid on preference shares 75
Cash interest paid to bondholders 105

Assume that Jacklyn Hyde classifies dividends and interest paid as financing
activities. In its statement of cash flows, Jacklyn Hyde should report net cash inflows
from financing activities of ______.

A. $60
million
B. $165
million
C. $210
million
D. $315
million

34. A firm reported ($ in millions) net cash inflows (outflows) as follows: operating $75,
investing $200, and financing $350. The beginning cash balance was $250. What was
the ending cash balance?

A. $87
5
B. $2
5
C. $47
5
D. $12
5

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35. Companies may report interest received and dividends received as investing
activities under ______.

A. U.S.
GAAP
B. IFRS
C. both U.S. GAAP and
IFRS
D. neither U.S. GAAP nor
IFRS

Matching Questions

36. Listed below are the reporting classifications for a statement of cash flows using the
direct method for reporting operating cash flows. Indicate the reporting classification
that would apply to each of the five transactions described below.

1. Noncash financing Cash collected on accounts

and investing activity receivable. ____
Payment of a property
2. Investing cash inflow dividend. ____
Cash collection of a non-trade
3. Operating cash inflow note receivable. ____
4. Investing cash Cash purchase of securities
outflow issued by another corporation. ____
Issuance of a long-term note
5. Financing cash inflow payable for cash. ____

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37. Listed below are reporting classifications for a statement of cash flows using the
indirect method for reporting operating cash flows. Indicate the reporting
classification that would apply to each of the five transactions described below.

Payment of semiannual interest

1. Financing cash on bonds payable (classified as
inflow operating cash outflow). ____
2. Investing cash Issuance of bonds at a discount
outflow for cash. ____
3. Operating activity,
no adjustment to net Acquisition of a building for
profit cash. ____
4. Operating activity,
negative adjustment
to net profit Decrease in account payable. ____
5. Operating activity,
positive adjustment to
net profit Depreciation expense. ____

Short Answer Questions

38. Listed below are the reporting classifications for a statement of cash flows using the
direct method for reporting operating cash flows. Indicate the reporting classification
that would apply to each of the five transactions.

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39. Listed below are reporting classifications for a statement of cash flows using the
indirect method for reporting operating cash flows. Indicate the reporting
classification that would apply to each of the five transactions described below.

40. Listed below are the reporting classifications for a statement of cash flows using the
direct method for reporting operating cash flows. Indicate the reporting classification
that would apply to each of the five transactions described below.

41. Listed below are the reporting classifications for a statement of cash flows using the
direct method for reporting operating cash flows. Indicate the reporting classification
that would apply to each of the five transactions described below.

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42. Listed below are several transactions that typically produce either an increase or a
decrease in cash. Indicate by letter whether the cash effect of each transaction is
reported on a statement of cash flows as an operating (O), investing (I) or financing
(F) activity.

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43. In its 2022 annual report to shareholders, Henchman & Co. provided the following
statement of cash flows:

Years ended December 31 ($ in millions) 2022 2021

Operating Activities
Cash Inflows
Cash received from customers
Progress payments $3,102 $1,438
Other collections 11,148 7,003
Proceeds from litigation settlement 220
Interest received 17 17
Income tax refunds received 23 15
Other cash receipts 24 10
Cash provided by operating activities 14,534 8,483
Cash Outflows
Cash paid to suppliers and employees 13,251 7,250
Interest paid 333 165
Income taxes paid 126 57
Other cash payments 7 1
Cash used in operating activities 13,717 7,473
Net cash provided by operating activities 817 1,010
Investing Activities
Payment for businesses purchased, net of cash acquired (3,061) (510)
Additions to property, plant, and equipment (393) (274)
Collection of note receivable 148
Proceeds from sale of property, plant, and equipment 86 44
Proceeds from sale of businesses 18 668
Other investing activities (2) (6)
Net cash used in investing activities (3,204) (78)
Financing Activities
Proceeds from issuance of long-term debt 1,491
Proceeds from equity security units 690
Borrowings under lines of credit 1,173
Repayment of borrowings under lines of credit (1,306) (175)
Principal payments on long-term debt/lease agreements (119) (485)
Proceeds from issuance of shares 825 19
Dividends paid (158) (114)
Other financing activities (64) ______
Net cash provided by (used in) financing activities 2,532 (755)
Increase in cash and cash equivalents 145 177
Cash and cash equivalents at beginning of year 319 142
Cash and cash equivalents at end of year $464 $319

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 Required:

What method (direct or indirect) does Henchman & Co. use to present its statement
of cash flows? Explain how you can determine which method is used.

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44. In its 2022 annual report to shareholders, Henchman & Co. provided the following
statement of cash flows:

Years ended December 31 ($ in millions) 2022 2021

Operating Activities
Cash Inflows
Cash received from customers
Progress payments $3,102 $1,438
Other collections 11,148 7,003
Proceeds from litigation settlement 220
Interest received 17 17
Income tax refunds received 23 15
Other cash receipts 24 10
Cash provided by operating activities 14,534 8,483
Cash Outflows
Cash paid to suppliers and employees 13,251 7,250
Interest paid 333 165
Income taxes paid 126 57
Other cash payments 7 1
Cash used in operating activities 13,717 7,473
Net cash provided by operating activities 817 1,010
Investing Activities
Payment for businesses purchased, net of cash acquired (3,061) (510)
Additions to property, plant, and equipment (393) (274)
Collection of note receivable 148
Proceeds from sale of property, plant, and equipment 86 44
Proceeds from sale of businesses 18 668
Other investing activities (2) (6)
Net cash used in investing activities (3,204) (78)
Financing Activities
Proceeds from issuance of long-term debt 1,491
Proceeds from equity security units 690
Borrowings under lines of credit 1,173
Repayment of borrowings under lines of credit (1,306) (175)
Principal payments on long-term debt/lease agreements (119) (485)
Proceeds from issuance of shares 825 19
Dividends paid (158) (114)
Other financing activities (64) ______
Net cash provided by (used in) financing activities 2,532 (755)
Increase in cash and cash equivalents 145 177
Cash and cash equivalents at beginning of year 319 142
Cash and cash equivalents at end of year $464 $319

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 Required:

What was the net change in cash and cash equivalents experienced by Henchman &
Co. during 2022? Was it positive or negative?

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45. In its 2022 annual report to shareholders, Henchman & Co. provided the following
statement of cash flows:

Years ended December 31 ($ in millions) 2022 2021

Operating Activities
Cash Inflows
Cash received from customers
Progress payments $3,102 $1,438
Other collections 11,148 7,003
Proceeds from litigation settlement 220
Interest received 17 17
Income tax refunds received 23 15
Other cash receipts 24 10
Cash provided by operating activities 14,534 8,483
Cash Outflows
Cash paid to suppliers and employees 13,251 7,250
Interest paid 333 165
Income taxes paid 126 57
Other cash payments 7 1
Cash used in operating activities 13,717 7,473
Net cash provided by operating activities 817 1,010
Investing Activities
Payment for businesses purchased, net of cash acquired (3,061) (510)
Additions to property, plant, and equipment (393) (274)
Collection of note receivable 148
Proceeds from sale of property, plant, and equipment 86 44
Proceeds from sale of businesses 18 668
Other investing activities (2) (6)
Net cash used in investing activities (3,204) (78)
Financing Activities
Proceeds from issuance of long-term debt 1,491
Proceeds from equity security units 690
Borrowings under lines of credit 1,173
Repayment of borrowings under lines of credit (1,306) (175)
Principal payments on long-term debt/lease agreements (119) (485)
Proceeds from issuance of shares 825 19
Dividends paid (158) (114)
Other financing activities (64) ______
Net cash provided by (used in) financing activities 2,532 (755)
Increase in cash and cash equivalents 145 177
Cash and cash equivalents at beginning of year 319 142
Cash and cash equivalents at end of year $464 $319

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 Required:

Which type of activity (operating, investing, financing) was most responsible for the
cash flow experienced by Henchman & Co. during 2022?

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46. In its 2022 annual report to shareholders, Henchman & Co. provided the following
statement of cash flows:

Years ended December 31 ($ in millions) 2022 2021

Operating Activities
Cash Inflows
Cash received from customers
Progress payments $3,102 $1,438
Other collections 11,148 7,003
Proceeds from litigation settlement 220
Interest received 17 17
Income tax refunds received 23 15
Other cash receipts 24 10
Cash provided by operating activities 14,534 8,483
Cash Outflows
Cash paid to suppliers and employees 13,251 7,250
Interest paid 333 165
Income taxes paid 126 57
Other cash payments 7 1
Cash used in operating activities 13,717 7,473
Net cash provided by operating activities 817 1,010
Investing Activities
Payment for businesses purchased, net of cash acquired (3,061) (510)
Additions to property, plant, and equipment (393) (274)
Collection of note receivable 148
Proceeds from sale of property, plant, and equipment 86 44
Proceeds from sale of businesses 18 668
Other investing activities (2) (6)
Net cash used in investing activities (3,204) (78)
Financing Activities
Proceeds from issuance of long-term debt 1,491
Proceeds from equity security units 690
Borrowings under lines of credit 1,173
Repayment of borrowings under lines of credit (1,306) (175)
Principal payments on long-term debt/lease agreements (119) (485)
Proceeds from issuance of shares 825 19
Dividends paid (158) (114)
Other financing activities (64) ______
Net cash provided by (used in) financing activities 2,532 (755)
Increase in cash and cash equivalents 145 177
Cash and cash equivalents at beginning of year 319 142
Cash and cash equivalents at end of year $464 $319

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 Required:

What is the most significant change in operating cash outflow activity in 2022
relative to 2021? What statement of financial position accounts would likely have
changed during 2022 in relation to the cash flow change that you identified?

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47. In its 2022 annual report to shareholders, Henchman & Co. provided the following
statement of cash flows:

Years ended December 31 ($ in millions) 2022 2021

Operating Activities
Cash Inflows
Cash received from customers
Progress payments $3,102 $1,438
Other collections 11,148 7,003
Proceeds from litigation settlement 220
Interest received 17 17
Income tax refunds received 23 15
Other cash receipts 24 10
Cash provided by operating activities 14,534 8,483
Cash Outflows
Cash paid to suppliers and employees 13,251 7,250
Interest paid 333 165
Income taxes paid 126 57
Other cash payments 7 1
Cash used in operating activities 13,717 7,473
Net cash provided by operating activities 817 1,010
Investing Activities
Payment for businesses purchased, net of cash acquired (3,061) (510)
Additions to property, plant, and equipment (393) (274)
Collection of note receivable 148
Proceeds from sale of property, plant, and equipment 86 44
Proceeds from sale of businesses 18 668
Other investing activities (2) (6)
Net cash used in investing activities (3,204) (78)
Financing Activities
Proceeds from issuance of long-term debt 1,491
Proceeds from equity security units 690
Borrowings under lines of credit 1,173
Repayment of borrowings under lines of credit (1,306) (175)
Principal payments on long-term debt/lease agreements (119) (485)
Proceeds from issuance of shares 825 19
Dividends paid (158) (114)
Other financing activities (64) ______
Net cash provided by (used in) financing activities 2,532 (755)
Increase in cash and cash equivalents 145 177
Cash and cash equivalents at beginning of year 319 142
Cash and cash equivalents at end of year $464 $319

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 Required:

What was most responsible for the negative cash flow from financing activities
during 2021? What amount was paid?

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48. In its 2022 annual report to shareholders, Henchman & Co. provided the following
statement of cash flows:

Years ended December 31 ($ in millions) 2022 2021

Operating Activities
Cash Inflows
Cash received from customers
Progress payments $3,102 $1,438
Other collections 11,148 7,003
Proceeds from litigation settlement 220
Interest received 17 17
Income tax refunds received 23 15
Other cash receipts 24 10
Cash provided by operating activities 14,534 8,483
Cash Outflows
Cash paid to suppliers and employees 13,251 7,250
Interest paid 333 165
Income taxes paid 126 57
Other cash payments 7 1
Cash used in operating activities 13,717 7,473
Net cash provided by operating activities 817 1,010
Investing Activities
Payment for businesses purchased, net of cash acquired (3,061) (510)
Additions to property, plant, and equipment (393) (274)
Collection of note receivable 148
Proceeds from sale of property, plant, and equipment 86 44
Proceeds from sale of businesses 18 668
Other investing activities (2) (6)
Net cash used in investing activities (3,204) (78)
Financing Activities
Proceeds from issuance of long-term debt 1,491
Proceeds from equity security units 690
Borrowings under lines of credit 1,173
Repayment of borrowings under lines of credit (1,306) (175)
Principal payments on long-term debt/lease agreements (119) (485)
Proceeds from issuance of shares 825 19
Dividends paid (158) (114)
Other financing activities (64) ______
Net cash provided by (used in) financing activities 2,532 (755)
Increase in cash and cash equivalents 145 177
Cash and cash equivalents at beginning of year 319 142
Cash and cash equivalents at end of year $464 $319

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 Required:

What was most responsible for the positive cash flow from financing activities during
2022? What amount was received?

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49. In its 2022 annual report to shareholders, Kinney Ltd reported the following
consolidated statement of cash flows for the years ended December 31:

2022 2021
Cash flow from operating activities:
Cash received from customers $197,942,040 $211,773,952
Cash paid to suppliers and employees (191,276,791) (200,474,336)
Interest paid, net (1,563,990) (2,098,523)
Income taxes paid (406,650) (542,250)
Cash provided by operations 4,694,609 8,658,843
Cash flow from investing activities:
Capital expenditures and acquisitions (3,003,579) (1,667,382)
Expenditures for other assets (43,560) (137,420)
Cash used in investing activities (3,047,139) (1,804,802)
Cash flow from financing activities:
Principal payments of long-term debt and lease (2,062,485) (6,370,175)
agreements
Addition to long-term debt and lease liability 3,068,378 1,434,847
Purchase of ordinary shares and other capital (1,605,906) (908,231)
transactions
Payment of dividends (855,558) (1,021,968)
Cash provided by (used in) financing activities (1,455,571) (6,865,527)
Net increase (decrease) in cash 191,899 (11,486)
Cash at beginning of year 192,615 204,101
Cash at end of year $384,514 $192,615
Reconciliation of net profit to net cash provided
by operations:
Net profit $1,747,833 $2,382,027
Depreciation and amortization 3,505,504 3,525,087
Deferred income taxes 205,000 344,766
Changes in assets and liabilities, net of
acquisitions:
Decrease (increase) in receivables (2,897,353) 4,120,668
Decrease (increase) in inventories (355,508) 6,041,490
Increase (decrease) in prepaid expenses 361,648 (94,350)
Increase (decrease) in controlled disbursements 373,394 83,718
Increase (decrease) in accounts payable 1,768,676 (8,164,148)
Increase (decrease) in accrued expenses (14,585) 417,616
Other, net 1,969
Cash provided by operations $4,694,609 $8,658,843

Required:

Assuming the decrease in accrued expenses during financial year 2022 included a

4-30
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 $20,000 reduction due to taxes, compute the income tax expense for Kinney in that
year.

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50. In its 2022 annual report to shareholders, Kinney Ltd reported the following
consolidated statement of cash flows for the years ended December 31:

2022 2021
Cash flow from operating activities:
Cash received from customers $197,942,040 $211,773,952
Cash paid to suppliers and employees (191,276,791) (200,474,336)
Interest paid, net (1,563,990) (2,098,523)
Income taxes paid (406,650) (542,250)
Cash provided by operations 4,694,609 8,658,843
Cash flow from investing activities:
Capital expenditures and acquisitions (3,003,579) (1,667,382)
Expenditures for other assets (43,560) (137,420)
Cash used in investing activities (3,047,139) (1,804,802)
Cash flow from financing activities:
Principal payments of long-term debt and lease (2,062,485) (6,370,175)
agreements
Addition to long-term debt and lease liability 3,068,378 1,434,847
Purchase of ordinary shares and other capital (1,605,906) (908,231)
transactions
Payment of dividends (855,558) (1,021,968)
Cash provided by (used in) financing activities (1,455,571) (6,865,527)
Net increase (decrease) in cash 191,899 (11,486)
Cash at beginning of year 192,615 204,101
Cash at end of year $384,514 $192,615
Reconciliation of net profit to net cash provided
by operations:
Net profit $1,747,833 $2,382,027
Depreciation and amortization 3,505,504 3,525,087
Deferred income taxes 205,000 344,766
Changes in assets and liabilities, net of
acquisitions:
Decrease (increase) in receivables (2,897,353) 4,120,668
Decrease (increase) in inventories (355,508) 6,041,490
Increase (decrease) in prepaid expenses 361,648 (94,350)
Increase (decrease) in controlled disbursements 373,394 83,718
Increase (decrease) in accounts payable 1,768,676 (8,164,148)
Increase (decrease) in accrued expenses (14,585) 417,616
Other, net 1,969
Cash provided by operations $4,694,609 $8,658,843

Required:
Kinney reported cost of goods sold of $168,114,150 in its financial year 2022
statement of profit or loss. Compute Kinney's net inventory purchases during the

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 year.

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51. In its 2022 annual report to shareholders, Kinney Ltd reported the following
consolidated statement of cash flows for the years ended December 31:

2022 2021
Cash flow from operating activities:
Cash received from customers $197,942,040 $211,773,952
Cash paid to suppliers and employees (191,276,791) (200,474,336)
Interest paid, net (1,563,990) (2,098,523)
Income taxes paid (406,650) (542,250)
Cash provided by operations 4,694,609 8,658,843
Cash flow from investing activities:
Capital expenditures and acquisitions (3,003,579) (1,667,382)
Expenditures for other assets (43,560) (137,420)
Cash used in investing activities (3,047,139) (1,804,802)
Cash flow from financing activities:
Principal payments of long-term debt and lease (2,062,485) (6,370,175)
agreements
Addition to long-term debt and lease liability 3,068,378 1,434,847
Purchase of ordinary shares and other capital (1,605,906) (908,231)
transactions
Payment of dividends (855,558) (1,021,968)
Cash provided by (used in) financing activities (1,455,571) (6,865,527)
Net increase (decrease) in cash 191,899 (11,486)
Cash at beginning of year 192,615 204,101
Cash at end of year $384,514 $192,615
Reconciliation of net profit to net cash provided
by operations:
Net profit $1,747,833 $2,382,027
Depreciation and amortization 3,505,504 3,525,087
Deferred income taxes 205,000 344,766
Changes in assets and liabilities, net of
acquisitions:
Decrease (increase) in receivables (2,897,353) 4,120,668
Decrease (increase) in inventories (355,508) 6,041,490
Increase (decrease) in prepaid expenses 361,648 (94,350)
Increase (decrease) in controlled disbursements 373,394 83,718
Increase (decrease) in accounts payable 1,768,676 (8,164,148)
Increase (decrease) in accrued expenses (14,585) 417,616
Other, net 1,969
Cash provided by operations $4,694,609 $8,658,843

Required:

Assuming the decrease in accrued expenses during financial year 2022 included a

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 $14,000 reduction due to interest on debt, compute the interest expense (net) for
Kinney in that year.

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52. In its 2022 annual report to shareholders, Kinney Ltd reported the following
consolidated statement of cash flows for the years ended December 31:

2022 2021
Cash flow from operating activities:
Cash received from customers $197,942,040 $211,773,952
Cash paid to suppliers and employees (191,276,791) (200,474,336)
Interest paid, net (1,563,990) (2,098,523)
Income taxes paid (406,650) (542,250)
Cash provided by operations 4,694,609 8,658,843
Cash flow from investing activities:
Capital expenditures and acquisitions (3,003,579) (1,667,382)
Expenditures for other assets (43,560) (137,420)
Cash used in investing activities (3,047,139) (1,804,802)
Cash flow from financing activities:
Principal payments of long-term debt and lease (2,062,485) (6,370,175)
agreements
Addition to long-term debt and lease liability 3,068,378 1,434,847
Purchase of ordinary shares and other capital (1,605,906) (908,231)
transactions
Payment of dividends (855,558) (1,021,968)
Cash provided by (used in) financing activities (1,455,571) (6,865,527)
Net increase (decrease) in cash 191,899 (11,486)
Cash at beginning of year 192,615 204,101
Cash at end of year $384,514 $192,615
Reconciliation of net profit to net cash provided
by operations:
Net profit $1,747,833 $2,382,027
Depreciation and amortization 3,505,504 3,525,087
Deferred income taxes 205,000 344,766
Changes in assets and liabilities, net of
acquisitions:
Decrease (increase) in receivables (2,897,353) 4,120,668
Decrease (increase) in inventories (355,508) 6,041,490
Increase (decrease) in prepaid expenses 361,648 (94,350)
Increase (decrease) in controlled disbursements 373,394 83,718
Increase (decrease) in accounts payable 1,768,676 (8,164,148)
Increase (decrease) in accrued expenses (14,585) 417,616
Other, net 1,969
Cash provided by operations $4,694,609 $8,658,843

Required:

Kinney reported cost of goods sold of $168,114,150 in its financial year 2022

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 statement of profit or loss Assuming that Kinney uses accounts payable strictly for
inventory purchases and that all such purchases are on credit, how much cash did
Kinney pay during the year for inventories to inventory suppliers? To employees?

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53. Following are the statement of profit or loss and some additional information for
Carolina Consulting Company.

Carolina Consulting Company

Statement of Profit or Loss
for the Year Ended December 31, 2022
Net sales $10,000
Cost of goods sold (1,500)
Gross margin 8,500
Operating expenses $2,000
Depreciation expense 900 (2,900)
Profit before taxes 5,600
Income taxes (1,600)
Net profit $4,000

All sales were on credit and accounts receivable decreased by $900 in 2022
compared to 2021. Merchandise purchases were on credit with a decrease in
accounts payable of $700 during the year. Ending inventory was $500 larger than
beginning inventory. Income taxes payable increased $300 during the year. All
operating expenses were paid for in cash.

Required:

Prepare the cash flows from the operating activities section of the statement of cash
flows for 2022 using the direct method.

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54. Following are the statement of profit or loss and some additional information for
Carolina Consulting Company.

Carolina Consulting Company

Statement of Profit or Loss
for the Year Ended December 31, 2022
Net sales $10,000
Cost of goods sold (1,500)
Gross margin 8,500
Operating expenses $2,000
Depreciation expense 900 (2,900)
Profit before taxes 5,600
Income taxes (1,600)
Net profit $4,000

All sales were on credit and accounts receivable decreased by $900 in 2022
compared to 2021. Merchandise purchases were on credit with a decrease in
accounts payable of $700 during the year. Ending inventory was $500 larger than
beginning inventory. Income taxes payable increased $300 during the year. All
operating expenses were paid for in cash.

Required:

Prepare the cash flows from the operating activities section of the statement of cash
flows for 2022 using the indirect method.

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55. The Murdock Corporation reported the following statement of financial position data
for 2022 and 2021:

2022 2021
Cash $77,375 $22,955
Available-for-sale debt securities
(not cash equivalents) 15,500 85,000
Accounts receivable 80,000 68,250
Inventory 165,000 145,000
Prepaid insurance 1,500 2,000
Land, buildings, and equipment 1,250,000 1,125,000
Accumulated depreciation (610,000) (572,000)
Total assets $979,375 $876,205
Accounts payable $76,340 $148,670
Salaries payable 20,000 24,500
Notes payable (current) 25,000 75,000
Bonds payable 200,000 0
Ordinary share capital 300,000 300,000
Retained earnings 358,035 328,035
Total liabilities and shareholders' equity $979,375 $876,205

Additional information for 2022:

(1) Sold available-for-sale debt securities costing $69,500 for $74,000.

(2) Equipment costing $20,000 with a book value of $5,000 was sold for $6,000.
(3) Issued 6% bonds payable at principal amount, $200,000.
(4) Purchased new equipment for $145,000 cash.
(5) Paid cash dividends of $20,000.
(6) Net profit was $50,000.

Required:

Assume that Murdock classifies dividends paid as a financing activity. Prepare a

statement of cash flows for 2022 using the indirect method for cash flows from
operating activities.

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56. The following are comparative statements of financial position and a statement of
profit or loss for Wentworth Company.

Wentworth Company
Statements of Financial Position
as of December 31
Assets 2022 2021
Cash $21,500 $120,000
Accounts receivable 195,000 105,000
Inventory 180,000 225,000
Long-term investments 0 60,000
Totals $396,500 $510,000
Liabilities and shareholders' equity
Accounts payable $75,000 $120,000
Operating expenses payable 24,000 15,000
Bonds payable 70,000 100,000
Ordinary share capital 125,000 125,000
Retained earnings 102,500 150,000
Totals $396,500 $510,000

Wentworth Company
Statement of Profit or Loss
for the Year Ended December 31, 2022
Sales $560,000
Cost of goods sold:
Beginning inventory $225,000
Purchases 330,000
Goods available for sale 555,000
Less: ending inventory 180,000
Cost of goods sold 375,000
Gross profit 185,000
Operating expenses 180,000
Profit from operations 5,000
Other expenses:
Loss on sale of long-term investment (7,500)
Net loss ($2,500)

Cash dividends of $45,000 were paid in 2022.

Required:

Assume that Wentworth classifies dividends paid as a financing activity. Prepare a

statement of cash flows for 2022 using the direct method.

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 Chapter 04 The Statement of Cash Flows Answer Key

True / False Questions

1. Amounts held in cash equivalent investments must be reported separately from

amounts held as cash in the statement of cash flows.

FALSE

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-01 Explain the purpose and usefulness of the statement of cash flows, and define cash
equivalents.
Topic: Cash-Cash Equivalents-Restricted cash

2. Generally speaking, cash flows from operating activities include the elements of
net profit or loss reported on a cash basis.

TRUE

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-01 Explain the purpose and usefulness of the statement of cash flows, and define cash
equivalents.
Learning Objective: 04-02 Identify transactions that are classified as operating activities.
Topic: General-Cash flow and disclosure items

3. If the direct method is used to report cash flows from operating activities in the
body of the statement of cash flows under IFRS, a reconciliation of net profit or
loss to net cash flows from operating activities is also required.

FALSE

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Topic: Distinguish direct and indirect methods

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4. Interest payments on debt can only be classified as cash outflows from financing
activities.

FALSE

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Identify transactions that are classified as operating activities.
Learning Objective: 04-06 Identify transactions that are classified as financing activities.
Topic: Identify as Operating-Investing-Financing

5. The purchase of treasury shares is an investing cash outflow.

FALSE

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-05 Identify transactions that are classified as investing activities.
Learning Objective: 04-06 Identify transactions that are classified as financing activities.
Topic: Identify as Operating-Investing-Financing

6. Transactions that represent noncash investing and financing activities must be

reported in the statement of cash flows or in disclosure notes.

TRUE

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-07 Identify transactions that represent non-cash investing and financing activities.
Topic: Non-cash investing and financing activities

7. Cash paid for taxes and interest must be disclosed on the face of the statement or
in the disclosure notes under both the direct and indirect methods of reporting
cash flows from operating activities.

TRUE

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.

4-45
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 Learning Objective: 04-04 Determine cash flows from operating activities by the indirect method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Distinguish direct and indirect methods
Topic: General-Cash flow and disclosure items

8. When one enters a $50,000 credit entry to the Land account in a spreadsheet for
the statement of cash flows, it represents a negative change in that account and is
probably due to selling such assets.

TRUE

AACSB: Analytical Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Spreadsheet preparation

9. A decrease in cash dividends payable means that dividends declared were less
than dividends paid.

TRUE

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Reconstruct investing or financing entry

10. In using a spreadsheet to prepare the statement of cash flows, the summary
entries duplicate the actual journal entries used to record the transactions during
the year.

TRUE

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Spreadsheet preparation

Multiple Choice Questions

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11. Creditors and investors would generally find the statement of cash flows least
useful for assessing the ______.

A. ability to generate future cash

flows
B. ability to pay
dividends
C. financial position at a point in
time
D. quality of
earnings

AACSB: Reflective Thinking

AICPA: FN Risk Analysis
Accessibility: Keyboard Navigation
Blooms: Evaluate
Difficulty: 2 Medium
Learning Objective: 04-01 Explain the purpose and usefulness of the statement of cash flows, and define cash
equivalents.
Topic: General-Cash flow and disclosure items

12. When a company purchases a security it considers a cash equivalent, the cash
outflow is ______.

A. reported as an operating
activity
B. reported as an investing
activity
C. reported as a financing
activity
D. not reported on a statement of cash
flows

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-01 Explain the purpose and usefulness of the statement of cash flows, and define cash
equivalents.
Topic: Cash-Cash Equivalents-Restricted cash

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13. When preparing a statement of cash flows using the direct method, accrual of
payroll expense is ______.

A. reported as an operating
activity
B. reported as an investing
activity
C. reported as a financing
activity
D. None of
these

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Topic: Distinguish direct and indirect methods

14. How is the amortization of patents reported in a statement of cash flows that is
prepared using the direct method?

A. not
reported
B. an increase in cash flows from operating
activities
C. a decrease in cash flows from operating
activities
D. a decrease in cash flows from investing
activities

AACSB: Analytical Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Topic: Distinguish direct and indirect methods
Topic: Non-cash operating items-Depreciation etc

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15. In a statement of cash flows in which operating activities are reported by the
direct method, which of the following could increase reported cash flows from
operating activities?

A. gain on sale of
equipment
B. interest
revenue
C. gain on early extinguishment of
bonds
D. proceeds from sale of
land
The two gains are not cash flows. Proceeds from the sale of land are reported as a
component of investing activities.

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Identify transactions that are classified as operating activities.
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Topic: Identify as Operating-Investing-Financing

16. Rampart Ltd recorded the following transaction:

Land 15 million
Notes payable 12 million
Cash 3 million

In the statement of cash flows, this would be reported as a ______.

A. $3 million outflow from investing

activities
B. $15 million outflow from investing
activities
C. $3 million outflow from investing activities and $12 million noncash investing
and financing activity
D. none of
these

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply

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 Difficulty: 3 Hard
Learning Objective: 04-05 Identify transactions that are classified as investing activities.
Learning Objective: 04-07 Identify transactions that represent non-cash investing and financing activities.
Topic: Calculate net investing cash flow
Topic: Non-cash investing and financing activities

17. A statement of cash flows and its related disclosure note typically does not report
______.

A. an acquisition of the use of a building with a finance lease

agreement
B. the purchase of treasury
shares
C. bonus issues of shares or share
dividends
D. notes payable issued for a tract of
land
Bonus issues or share dividends do not change assets, liabilities, or total
shareholders' equity.

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-07 Identify transactions that represent non-cash investing and financing activities.
Topic: Non-cash investing and financing activities

18. Property dividends distributed are reported in connection with a statement of cash
flows as ______.

A. a financing
activity
B. an investing
activity
C. a noncash
activity
D. not reported in the statement of
cash flows
Property dividends represent a significant noncash investing and financing activity.

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation

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 Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-07 Identify transactions that represent non-cash investing and financing activities.
Topic: Non-cash investing and financing activities

19. Which of the following is not true regarding the statement of cash flows?

A. The indirect method derives cash flows indirectly by starting with sales revenue
and "working backwards" to convert that amount to a cash basis.
B. Noncash transactions are sometimes reported in conjunction with the
statement.
C. Either the direct or the indirect method can be used to calculate and report the
net cash increase or decrease from operating activities.
D. The statement of cash flows provides information about cash flows that the
other statements either do not provide or provide only indirectly.
The indirect method derives cash flows indirectly by starting with net profit or loss
and "working backwards" to convert that amount to a cash basis.

AACSB: Analytical Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 2 Medium
Learning Objective: 04-01 Explain the purpose and usefulness of the statement of cash flows, and define cash
equivalents.
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Learning Objective: 04-04 Determine cash flows from operating activities by the indirect method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Distinguish direct and indirect methods
Topic: General-Cash flow and disclosure items

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20. On December 31, 2022, Wellstone Company reported net profit of $70,000 and
sales of $210,000. The company also reported beginning and ending accounts
receivable at $20,000 and $25,000, respectively. Wellstone will report cash
collected from customers in its 2022 statement of cash flows (direct method) in
the amount of ______.

A. $215,00
0
B. $285,00
0
C. $135,00
0
D. $205,00
0
Beginning balance, accounts receivable $20,000
Plus Sales 210,000
Minus Ending balance, Account receivable (25,000)
= Cash collected from customers $205,000

Cash 205,000
Accounts receivable 5,000
Sales revenue 210,000

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Direct method-Cash received from customers

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21. Pickering Company's prepaid insurance was $8,000 as of December 31, 2021, and
$10,000 as of December 31, 2022. Pickering reported insurance expense of
$15,000 on the 2022 statement of profit or loss. What amount would be reported
in the statement of cash flows as insurance paid using the direct method?

A. $13,00
0
B. $17,00
0
C. $15,00
0
D. $23,00
0
Ending balance, prepaid insurance $10,000
Plus insurance expense 15,000
Minus beginning balance, prepaid insurance (8,000)
= Cash paid for insurance $17,000

Insurance expense 15,000

Prepaid insurance 2,000
Cash 17,000

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Direct method-Cash paid for expenses

4-53
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22. Dooling Corporation reported balances in the following accounts for the current
year:

Beginning Ending
Inventories $600 $300
Accounts payable 300 500

Cost of goods sold was $7,500. What was the amount of cash paid to suppliers?

A. $7,00
0
B. $7,20
0
C. $7,30
0
D. $7,50
0
Cost of goods sold 7,500
Inventory 300
Accounts payable 200
Cash 7,000

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Direct method-Cash paid to suppliers

4-54
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McGraw-Hill Education.
23. Sneed Corporation reported balances in the following accounts for the current
year:

Beginning Ending
Income tax payable $50 $30
Deferred tax liability 80 140

Income tax expense was $230 for the year. What was the amount paid for taxes?

A. $28
0
B. $22
0
C. $21
0
D. $19
0
Income tax expense 230
Income tax payable 20
Deferred tax liability 60
Cash 190

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Direct method-Cash paid for expenses

24. In determining cash flows from operating activities (indirect method), adjustments
to net profit or loss should not include ______.

A. an addition for depreciation

expense
B. an addition for bond discount
amortization
C. an addition for a gain on sale of
equipment
D. an addition for patent
amortization

AACSB: Reflective Thinking

AICPA: FN Measurement

4-55
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McGraw-Hill Education.
 Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Determine cash flows from operating activities by the indirect method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Distinguish direct and indirect methods
Topic: Non-cash operating items-Depreciation etc

25. S Company reported net profit for 2022 in the amount of $400,000. The company's
financial statements also included the following:

Increase in accounts receivable $80,000

Decrease in inventory 60,000
Increase in accounts payable 200,000
Depreciation expense 104,000
Gain on sale of land 148,000

What is net cash provided by operating activities under the indirect method?

A. $432,00
0
B. $536,00
0
C. $580,00
0
D. $832,00
0
$400,000 − 80,000 + 60,000 + 200,000 + 104,000 − 148,000 = $536,000

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 04-04 Determine cash flows from operating activities by the indirect method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Calculate net operating cash flow-Indirect

4-56
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26. Which of the following is reported as a deduction from net profit when using the
indirect method to determine net cash flows from operating activities?

A. depreciation
expense
B. amortization of a
patent
C. amortization of premium on bonds
payable
D. dividends
declared

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-04 Determine cash flows from operating activities by the indirect method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Distinguish direct and indirect methods
Topic: Non-cash operating items-Depreciation etc

4-57
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McGraw-Hill Education.
27. Creble Company reported net profit for 2022 in the amount of $40,000. The
company's financial statements also included the following:

Increase in accounts receivable $4,000

Decrease in inventory 2,000
Depreciation expense 3,000
Gain on sale of equipment 5,000

In the statement of cash flows what is net cash provided by operating activities
under the indirect method?

A. $36,00
0
B. $41,00
0
C. $40,00
0
D. $38,00
0
Net profit $40,000
Increase in accounts receivable (4,000)
Decrease in inventory 2,000
Depreciation expense 3,000
Gain on sale of equipment (5,000)
Net cash flows from operating activities $36,000

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 04-04 Determine cash flows from operating activities by the indirect method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Calculate net operating cash flow-Indirect

4-58
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McGraw-Hill Education.
28. When using the indirect method to determine cash flows from operating activities,
adjustments to net profit or loss should not include ______.

A. an addition for amortization

expense
B. an addition for bond discount
amortization
C. an addition for a
gain
D. an addition for a
loss
A gain is added in the statement of profit or loss and would need to be deducted
from net profit.

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 04-04 Determine cash flows from operating activities by the indirect method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Distinguish direct and indirect methods
Topic: Non-cash operating items-Depreciation etc

4-59
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McGraw-Hill Education.
29. The net profit for Howie Doohan Corporation was $280 million for the year ended
December 31, 2022. Related information follows:

Sale of ordinary shares for cash, $34 million.

Amortization of trademark, $2 million.
Cash dividends paid, $28 million.
Decrease in salaries payable, $2 million.
Depreciation expense, $40 million.
Increase in accounts payable, $18 million.
Increase in bonds payable, $26 million.

Assume that the company classifies dividends paid as a financing activity. Net
cash flows from operating activities during 2022 should be reported as ______.

A. $302
million
B. $338
million
C. $342
million
D. $364
million
Cash flows from operating activities = $280 + $2 (amortization of trademark) +
$18 (increase in accounts payable) − $2 (decrease in salaries payable) + $40
(depreciation expense).

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 04-02 Identify transactions that are classified as operating activities.
Learning Objective: 04-04 Determine cash flows from operating activities by the indirect method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Calculate net operating cash flow-Indirect
Topic: Identify as Operating-Investing-Financing

4-60
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30. Selected information from Peridot Corporation's accounting records and financial
statements for 2022 is as follows ($ in millions):

Cash paid to acquire machinery $36

Reacquired Peridot ordinary shares 50
Proceeds from sale of land 90
Gain from the sale of land 52
Investment revenue received 66
Cash paid to acquire office equipment 80

Assume that Peridot classifies investment revenue received as an operating

activity. In its statement of cash flows, Peridot should report net cash outflows
from investing activities of ______.

A. $26
million
B. $46
million
C. $72
million
D. $78
million
−$36 + 90 − 80 = −$26

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 04-05 Identify transactions that are classified as investing activities.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Calculate net investing cash flow
Topic: Identify as Operating-Investing-Financing

4-61
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31. Selected information from Isadore Bell Corporation's accounting records and
financial statements for 2022 is as follows ($ in millions):

Cash paid to acquire equipment $120

Cash paid to acquire land 54
Treasury shares acquired with cash and then retired 75
Dividend revenue received 66
Gain from the sale of buildings 78
Proceeds from sale of buildings 135

Assume that Isadore Bell classifies dividend received as an operating activity. In its
statement of cash flows, Isadore Bell should report net cash outflows from
investing activities of ______.

A. $39
million
B. $69
million
C. $114
million
D. $117
million
$135 million (proceeds from sale of buildings) − $54 (cash paid to acquire land) −
$120 million (cash paid to acquire equipment).

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 04-05 Identify transactions that are classified as investing activities.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Calculate net investing cash flow
Topic: Identify as Operating-Investing-Financing

4-62
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32. In preparing its statement of cash flows for the year ended December 31, 2022,
Green Co. gathered the following data:

Gain on sale of land $12,000

Proceeds from sale of land 20,000
Purchase of Black Ltd bonds (face value $200,000) 360,000
Amortization of bond discount 4,000
Cash dividends declared 90,000
Cash dividends paid 76,000
Proceeds from sale of Green Co. ordinary shares 150,000

Assume that Green classifies cash dividends as a financing activity. In its

December 31, 2022 statement of cash flows, what amount should Green report as
net cash from financing activities?

A. $40,00
0
B. $54,00
0
C. $60,00
0
D. $74,00
0
$150,000 − 76,000 = $74,000

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 04-06 Identify transactions that are classified as financing activities.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Calculate net financing cash flow
Topic: Identify as Operating-Investing-Financing

4-63
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33. Selected information from Jacklyn Hyde Corporation's accounting records and
financial statements for 2022 is as follows ($ in millions):

Cash paid to retire notes $90

Common shares acquired for treasury 150
Proceeds from issuance of preference shares 210
Proceeds from issuance of subordinated bonds 270
Cash dividends paid on preference shares 75
Cash interest paid to bondholders 105

Assume that Jacklyn Hyde classifies dividends and interest paid as financing
activities. In its statement of cash flows, Jacklyn Hyde should report net cash
inflows from financing activities of ______.

A. $60
million
B. $165
million
C. $210
million
D. $315
million
$210 (proceeds from issuance of preference shares) + $270 (proceeds from
issuance of bonds) − $90 (cash paid to retire notes) − $150 (reacquired shares) −
$75 (cash dividends paid on shares) − $105 (cash interest paid).

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 04-06 Identify transactions that are classified as financing activities.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Calculate net financing cash flow
Topic: Identify as Operating-Investing-Financing

4-64
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McGraw-Hill Education.
34. A firm reported ($ in millions) net cash inflows (outflows) as follows: operating $75,
investing $200, and financing $350. The beginning cash balance was $250. What
was the ending cash balance?

A. $87
5
B. $2
5
C. $47
5
D. $12
5
$75 − $200 + $350 + $250 = $475

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Reconcile change in cash balance

35. Companies may report interest received and dividends received as investing
activities under ______.

A. U.S.
GAAP
B. IFRS
C. both U.S. GAAP and
IFRS
D. neither U.S. GAAP nor
IFRS

AACSB: Diversity
AACSB: Reflective Thinking
AICPA: BB Global
AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-09 Discuss the primary differences between IFRS and U.S. GAAP with respect to the
statement of cash flows.
Topic: Identify as Operating-Investing-Financing

4-65
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McGraw-Hill Education.
Matching Questions

36. Listed below are the reporting classifications for a statement of cash flows using
the direct method for reporting operating cash flows. Indicate the reporting
classification that would apply to each of the five transactions described below.

1. Noncash financing Cash collected on accounts

and investing activity receivable. 3
Payment of a property
2. Investing cash inflow dividend. 1
Cash collection of a non-trade
3. Operating cash inflow note receivable. 2
Cash purchase of securities
4. Investing cash outflow issued by another corporation. 4
Issuance of a long-term note
5. Financing cash inflow payable for cash. 5

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Identify transactions that are classified as operating activities.
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Learning Objective: 04-05 Identify transactions that are classified as investing activities.
Learning Objective: 04-06 Identify transactions that are classified as financing activities.
Learning Objective: 04-07 Identify transactions that represent non-cash investing and financing activities.
Topic: Identify as Operating-Investing-Financing

4-66
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McGraw-Hill Education.
37. Listed below are reporting classifications for a statement of cash flows using the
indirect method for reporting operating cash flows. Indicate the reporting
classification that would apply to each of the five transactions described below.

Payment of semiannual interest

1. Financing cash on bonds payable (classified as
inflow operating cash outflow). 3
2. Investing cash Issuance of bonds at a discount
outflow for cash. 1
3. Operating activity,
no adjustment to net Acquisition of a building for
profit cash. 2
4. Operating activity,
negative adjustment
to net profit Decrease in account payable. 4
5. Operating activity,
positive adjustment to
net profit Depreciation expense. 5

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Identify transactions that are classified as operating activities.
Learning Objective: 04-04 Determine cash flows from operating activities by the indirect method.
Learning Objective: 04-05 Identify transactions that are classified as investing activities.
Learning Objective: 04-06 Identify transactions that are classified as financing activities.
Topic: Effect of operating changes-Indirect
Topic: Identify as Operating-Investing-Financing

Short Answer Questions

4-67
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McGraw-Hill Education.
3 Listed below are the reporting classifications for a statement of cash flows using the
8. direct method for reporting operating cash flows. Indicate the reporting classification
that would apply to each of the five transactions.

1. Operating cash outflow Interest received on cash savings account. 4 or 5

2. Not reported for the statement of cash Cash purchase of inventory.
flows
3. Financing cash outflow Cash dividends received under the equity 4 or 5
method.
4. Operating cash inflow Principal repayment on a note.
5. Investing cash inflow Distribution of a bonus issue.

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 04-02 Identify transactions that are classified as operating activities.
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Learning Objective: 04-05 Identify transactions that are classified as investing activities.
Learning Objective: 04-06 Identify transactions that are classified as financing activities.
Learning Objective: 04-07 Identify transactions that represent non-cash investing and financing activities.
Topic: Identify as Operating-Investing-Financing
Topic: Non-cash investing and financing activities

39. Listed below are reporting classifications for a statement of cash flows using the
indirect method for reporting operating cash flows. Indicate the reporting
classification that would apply to each of the five transactions described below.

1. Operating activity, no adjustment to Increase in inventory account. 2

net profit
2. Operating activity, negative Payment of cash dividends. 3 or 2
adjustment to net profit
3. Financing cash outflow Cash sales. 1
4. Investing cash inflow Prepayment of an insurance premium for 2
six months.
5. Operating activity, positive Cash proceeds from sale of equipment. 4
adjustment to net profit

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation

4-68
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McGraw-Hill Education.
 Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Identify transactions that are classified as operating activities.
Learning Objective: 04-04 Determine cash flows from operating activities by the indirect method.
Learning Objective: 04-05 Identify transactions that are classified as investing activities.
Learning Objective: 04-06 Identify transactions that are classified as financing activities.
Topic: Effect of operating changes-Indirect
Topic: Identify as Operating-Investing-Financing

40. Listed below are the reporting classifications for a statement of cash flows using
the direct method for reporting operating cash flows. Indicate the reporting
classification that would apply to each of the five transactions described below.

1. Investing cash outflow Acquisition of equipment by issuing bonds 2

payable.
2. Noncash financing and Repayment of long-term debt by issuing 2
investing activity preference shares.
3. Financing cash outflow Interest received on trading securities. 4 or 5
4. Investing cash inflow Cash sale of a patent. 4
5. Operating cash inflow Loan of cash to a supplier in exchange for a six- 1
month note receivable.

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Identify transactions that are classified as operating activities.
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Learning Objective: 04-05 Identify transactions that are classified as investing activities.
Learning Objective: 04-07 Identify transactions that represent non-cash investing and financing activities.
Topic: Identify as Operating-Investing-Financing
Topic: Non-cash investing and financing activities

4-69
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McGraw-Hill Education.
41. Listed below are the reporting classifications for a statement of cash flows using
the direct method for reporting operating cash flows. Indicate the reporting
classification that would apply to each of the five transactions described below.

1. Not reported for the Payment of cash dividends. 3 or 5

statement of cash flows
2. Noncash financing and Purchase of treasury shares. 3
investing activity
3. Financing cash outflow Investment of excess cash in an interest-bearing 1
security classified as a cash equivalent.
4. Financing cash inflow Sale of a cash equivalent at a loss, resulting in a 5
decrease in total cash equivalents.
5. Operating cash outflow Acquisition of equipment under a finance lease. 2

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 04-02 Identify transactions that are classified as operating activities.
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Learning Objective: 04-06 Identify transactions that are classified as financing activities.
Learning Objective: 04-07 Identify transactions that represent non-cash investing and financing activities.
Topic: Cash-Cash Equivalents-Restricted cash
Topic: Identify as Operating-Investing-Financing
Topic: Non-cash operating items-Depreciation etc

4-70
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McGraw-Hill Education.
42. Listed below are several transactions that typically produce either an increase or a
decrease in cash. Indicate by letter whether the cash effect of each transaction is
reported on a statement of cash flows as an operating (O), investing (I) or
financing (F) activity.

1. F Sale of preference shares

2. I Sale of equipment at a gain
3. F Purchase of treasury shares
4. O Merchandise sales
5. F Issuance of a short-term note payable
6. O Purchase of inventory
7. F Repayment of note payable
8. O Employee salaries
9. I Sale of land
10. F Issuance of bonds
11. I Acquisition of bonds of another corporation
12. O or F Payment of semiannual interest on bonds payable
13. O or F Payment of a cash dividend
14. I Purchase of an office building
15. I Collection of non-trade note receivable (principal amount)
16. I Loan to another company
17. F Purchase of ordinary shares for their retirement
18. O Payment of income taxes
19. F Issuance of a long-term note payable
20. I Sale of a patent

AACSB: Reflective Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 04-02 Identify transactions that are classified as operating activities.
Learning Objective: 04-05 Identify transactions that are classified as investing activities.
Learning Objective: 04-06 Identify transactions that are classified as financing activities.
Topic: Identify as Operating-Investing-Financing

4-71
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43. In its 2022 annual report to shareholders, Henchman & Co. provided the following
statement of cash flows:

Years ended December 31 ($ in millions) 2022 2021

Operating Activities
Cash Inflows
Cash received from customers
Progress payments $3,102 $1,438
Other collections 11,148 7,003
Proceeds from litigation settlement 220
Interest received 17 17
Income tax refunds received 23 15
Other cash receipts 24 10
Cash provided by operating activities 14,534 8,483
Cash Outflows
Cash paid to suppliers and employees 13,251 7,250
Interest paid 333 165
Income taxes paid 126 57
Other cash payments 7 1
Cash used in operating activities 13,717 7,473
Net cash provided by operating activities 817 1,010
Investing Activities
Payment for businesses purchased, net of cash acquired (3,061) (510)
Additions to property, plant, and equipment (393) (274)
Collection of note receivable 148
Proceeds from sale of property, plant, and equipment 86 44
Proceeds from sale of businesses 18 668
Other investing activities (2) (6)
Net cash used in investing activities (3,204) (78)
Financing Activities
Proceeds from issuance of long-term debt 1,491
Proceeds from equity security units 690
Borrowings under lines of credit 1,173
Repayment of borrowings under lines of credit (1,306) (175)
Principal payments on long-term debt/lease agreements (119) (485)
Proceeds from issuance of shares 825 19
Dividends paid (158) (114)
Other financing activities (64) ______
Net cash provided by (used in) financing activities 2,532 (755)
Increase in cash and cash equivalents 145 177
Cash and cash equivalents at beginning of year 319 142
Cash and cash equivalents at end of year $464 $319

4-72
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 Required:

What method (direct or indirect) does Henchman & Co. use to present its
statement of cash flows? Explain how you can determine which method is used.

Henchman & Co. uses the direct method, one of very few companies that do. One
can tell this by the fact that it simply lists sources and uses of cash in the
operating activities section, rather than starting with net profit and making the
series of adjustments necessary to work back to operating cash flows.

AACSB: Analytical Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 1 Easy
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Topic: Distinguish direct and indirect methods

4-73
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McGraw-Hill Education.
44. In its 2022 annual report to shareholders, Henchman & Co. provided the following
statement of cash flows:

Years ended December 31 ($ in millions) 2022 2021

Operating Activities
Cash Inflows
Cash received from customers
Progress payments $3,102 $1,438
Other collections 11,148 7,003
Proceeds from litigation settlement 220
Interest received 17 17
Income tax refunds received 23 15
Other cash receipts 24 10
Cash provided by operating activities 14,534 8,483
Cash Outflows
Cash paid to suppliers and employees 13,251 7,250
Interest paid 333 165
Income taxes paid 126 57
Other cash payments 7 1
Cash used in operating activities 13,717 7,473
Net cash provided by operating activities 817 1,010
Investing Activities
Payment for businesses purchased, net of cash acquired (3,061) (510)
Additions to property, plant, and equipment (393) (274)
Collection of note receivable 148
Proceeds from sale of property, plant, and equipment 86 44
Proceeds from sale of businesses 18 668
Other investing activities (2) (6)
Net cash used in investing activities (3,204) (78)
Financing Activities
Proceeds from issuance of long-term debt 1,491
Proceeds from equity security units 690
Borrowings under lines of credit 1,173
Repayment of borrowings under lines of credit (1,306) (175)
Principal payments on long-term debt/lease agreements (119) (485)
Proceeds from issuance of shares 825 19
Dividends paid (158) (114)
Other financing activities (64) ______
Net cash provided by (used in) financing activities 2,532 (755)
Increase in cash and cash equivalents 145 177
Cash and cash equivalents at beginning of year 319 142
Cash and cash equivalents at end of year $464 $319

4-74
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 Required:

What was the net change in cash and cash equivalents experienced by Henchman
& Co. during 2022? Was it positive or negative?

$145 million positive change (increase).

AACSB: Analytical Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Analyze
Difficulty: 1 Easy
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Reconcile change in cash balance

4-75
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45. In its 2022 annual report to shareholders, Henchman & Co. provided the following
statement of cash flows:

Years ended December 31 ($ in millions) 2022 2021

Operating Activities
Cash Inflows
Cash received from customers
Progress payments $3,102 $1,438
Other collections 11,148 7,003
Proceeds from litigation settlement 220
Interest received 17 17
Income tax refunds received 23 15
Other cash receipts 24 10
Cash provided by operating activities 14,534 8,483
Cash Outflows
Cash paid to suppliers and employees 13,251 7,250
Interest paid 333 165
Income taxes paid 126 57
Other cash payments 7 1
Cash used in operating activities 13,717 7,473
Net cash provided by operating activities 817 1,010
Investing Activities
Payment for businesses purchased, net of cash acquired (3,061) (510)
Additions to property, plant, and equipment (393) (274)
Collection of note receivable 148
Proceeds from sale of property, plant, and equipment 86 44
Proceeds from sale of businesses 18 668
Other investing activities (2) (6)
Net cash used in investing activities (3,204) (78)
Financing Activities
Proceeds from issuance of long-term debt 1,491
Proceeds from equity security units 690
Borrowings under lines of credit 1,173
Repayment of borrowings under lines of credit (1,306) (175)
Principal payments on long-term debt/lease agreements (119) (485)
Proceeds from issuance of shares 825 19
Dividends paid (158) (114)
Other financing activities (64) ______
Net cash provided by (used in) financing activities 2,532 (755)
Increase in cash and cash equivalents 145 177
Cash and cash equivalents at beginning of year 319 142
Cash and cash equivalents at end of year $464 $319

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 Required:

Which type of activity (operating, investing, financing) was most responsible for
the cash flow experienced by Henchman & Co. during 2022?

Investing activities were most responsible.

AACSB: Analytical Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Evaluate
Difficulty: 2 Medium
Learning Objective: 04-01 Explain the purpose and usefulness of the statement of cash flows, and define cash
equivalents.
Topic: General-Cash flow and disclosure items

4-77
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McGraw-Hill Education.
46. In its 2022 annual report to shareholders, Henchman & Co. provided the following
statement of cash flows:

Years ended December 31 ($ in millions) 2022 2021

Operating Activities
Cash Inflows
Cash received from customers
Progress payments $3,102 $1,438
Other collections 11,148 7,003
Proceeds from litigation settlement 220
Interest received 17 17
Income tax refunds received 23 15
Other cash receipts 24 10
Cash provided by operating activities 14,534 8,483
Cash Outflows
Cash paid to suppliers and employees 13,251 7,250
Interest paid 333 165
Income taxes paid 126 57
Other cash payments 7 1
Cash used in operating activities 13,717 7,473
Net cash provided by operating activities 817 1,010
Investing Activities
Payment for businesses purchased, net of cash acquired (3,061) (510)
Additions to property, plant, and equipment (393) (274)
Collection of note receivable 148
Proceeds from sale of property, plant, and equipment 86 44
Proceeds from sale of businesses 18 668
Other investing activities (2) (6)
Net cash used in investing activities (3,204) (78)
Financing Activities
Proceeds from issuance of long-term debt 1,491
Proceeds from equity security units 690
Borrowings under lines of credit 1,173
Repayment of borrowings under lines of credit (1,306) (175)
Principal payments on long-term debt/lease agreements (119) (485)
Proceeds from issuance of shares 825 19
Dividends paid (158) (114)
Other financing activities (64) ______
Net cash provided by (used in) financing activities 2,532 (755)
Increase in cash and cash equivalents 145 177
Cash and cash equivalents at beginning of year 319 142
Cash and cash equivalents at end of year $464 $319

4-78
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 Required:

What is the most significant change in operating cash outflow activity in 2022
relative to 2021? What statement of financial position accounts would likely have
changed during 2022 in relation to the cash flow change that you identified?

Cash payments to suppliers and employees increased from $7,250 million to

$13,251 million. Accounts Payable and Wages/Salaries Payable are probably the
accounts that would have changed.

AACSB: Analytical Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Evaluate
Difficulty: 2 Medium
Learning Objective: 04-01 Explain the purpose and usefulness of the statement of cash flows, and define cash
equivalents.
Topic: General-Cash flow and disclosure items

4-79
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47. In its 2022 annual report to shareholders, Henchman & Co. provided the following
statement of cash flows:

Years ended December 31 ($ in millions) 2022 2021

Operating Activities
Cash Inflows
Cash received from customers
Progress payments $3,102 $1,438
Other collections 11,148 7,003
Proceeds from litigation settlement 220
Interest received 17 17
Income tax refunds received 23 15
Other cash receipts 24 10
Cash provided by operating activities 14,534 8,483
Cash Outflows
Cash paid to suppliers and employees 13,251 7,250
Interest paid 333 165
Income taxes paid 126 57
Other cash payments 7 1
Cash used in operating activities 13,717 7,473
Net cash provided by operating activities 817 1,010
Investing Activities
Payment for businesses purchased, net of cash acquired (3,061) (510)
Additions to property, plant, and equipment (393) (274)
Collection of note receivable 148
Proceeds from sale of property, plant, and equipment 86 44
Proceeds from sale of businesses 18 668
Other investing activities (2) (6)
Net cash used in investing activities (3,204) (78)
Financing Activities
Proceeds from issuance of long-term debt 1,491
Proceeds from equity security units 690
Borrowings under lines of credit 1,173
Repayment of borrowings under lines of credit (1,306) (175)
Principal payments on long-term debt/lease agreements (119) (485)
Proceeds from issuance of shares 825 19
Dividends paid (158) (114)
Other financing activities (64) ______
Net cash provided by (used in) financing activities 2,532 (755)
Increase in cash and cash equivalents 145 177
Cash and cash equivalents at beginning of year 319 142
Cash and cash equivalents at end of year $464 $319

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 Required:

What was most responsible for the negative cash flow from financing activities
during 2021? What amount was paid?

Principal payments on long-term debt and lease agreements were $485 million.

AACSB: Analytical Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Evaluate
Difficulty: 2 Medium
Learning Objective: 04-01 Explain the purpose and usefulness of the statement of cash flows, and define cash
equivalents.
Topic: General-Cash flow and disclosure items

4-81
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McGraw-Hill Education.
48. In its 2022 annual report to shareholders, Henchman & Co. provided the following
statement of cash flows:

Years ended December 31 ($ in millions) 2022 2021

Operating Activities
Cash Inflows
Cash received from customers
Progress payments $3,102 $1,438
Other collections 11,148 7,003
Proceeds from litigation settlement 220
Interest received 17 17
Income tax refunds received 23 15
Other cash receipts 24 10
Cash provided by operating activities 14,534 8,483
Cash Outflows
Cash paid to suppliers and employees 13,251 7,250
Interest paid 333 165
Income taxes paid 126 57
Other cash payments 7 1
Cash used in operating activities 13,717 7,473
Net cash provided by operating activities 817 1,010
Investing Activities
Payment for businesses purchased, net of cash acquired (3,061) (510)
Additions to property, plant, and equipment (393) (274)
Collection of note receivable 148
Proceeds from sale of property, plant, and equipment 86 44
Proceeds from sale of businesses 18 668
Other investing activities (2) (6)
Net cash used in investing activities (3,204) (78)
Financing Activities
Proceeds from issuance of long-term debt 1,491
Proceeds from equity security units 690
Borrowings under lines of credit 1,173
Repayment of borrowings under lines of credit (1,306) (175)
Principal payments on long-term debt/lease agreements (119) (485)
Proceeds from issuance of shares 825 19
Dividends paid (158) (114)
Other financing activities (64) ______
Net cash provided by (used in) financing activities 2,532 (755)
Increase in cash and cash equivalents 145 177
Cash and cash equivalents at beginning of year 319 142
Cash and cash equivalents at end of year $464 $319

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 Required:

What was most responsible for the positive cash flow from financing activities
during 2022? What amount was received?

Proceeds from issuance of long-term debt were $1,491 million.

AACSB: Analytical Thinking

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Evaluate
Difficulty: 2 Medium
Learning Objective: 04-01 Explain the purpose and usefulness of the statement of cash flows, and define cash
equivalents.
Topic: General-Cash flow and disclosure items

4-83
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McGraw-Hill Education.
49. In its 2022 annual report to shareholders, Kinney Ltd reported the following
consolidated statement of cash flows for the years ended December 31:

2022 2021
Cash flow from operating activities:
Cash received from customers $197,942,040 $211,773,952
Cash paid to suppliers and employees (191,276,791) (200,474,336)
Interest paid, net (1,563,990) (2,098,523)
Income taxes paid (406,650) (542,250)
Cash provided by operations 4,694,609 8,658,843
Cash flow from investing activities:
Capital expenditures and acquisitions (3,003,579) (1,667,382)
Expenditures for other assets (43,560) (137,420)
Cash used in investing activities (3,047,139) (1,804,802)
Cash flow from financing activities:
Principal payments of long-term debt and lease (2,062,485) (6,370,175)
agreements
Addition to long-term debt and lease liability 3,068,378 1,434,847
Purchase of ordinary shares and other capital (1,605,906) (908,231)
transactions
Payment of dividends (855,558) (1,021,968)
Cash provided by (used in) financing activities (1,455,571) (6,865,527)
Net increase (decrease) in cash 191,899 (11,486)
Cash at beginning of year 192,615 204,101
Cash at end of year $384,514 $192,615
Reconciliation of net profit to net cash provided
by operations:
Net profit $1,747,833 $2,382,027
Depreciation and amortization 3,505,504 3,525,087
Deferred income taxes 205,000 344,766
Changes in assets and liabilities, net of
acquisitions:
Decrease (increase) in receivables (2,897,353) 4,120,668
Decrease (increase) in inventories (355,508) 6,041,490
Increase (decrease) in prepaid expenses 361,648 (94,350)
Increase (decrease) in controlled 373,394 83,718
disbursements
Increase (decrease) in accounts payable 1,768,676 (8,164,148)
Increase (decrease) in accrued expenses (14,585) 417,616
Other, net 1,969
Cash provided by operations $4,694,609 $8,658,843

Required:

4-84
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 Assuming the decrease in accrued expenses during financial year 2022 included a
$20,000 reduction due to taxes, compute the income tax expense for Kinney in
that year.

The reduction in accrued taxes is actually a reduction in taxes payable, a liability.

Therefore, Beg. taxes payable + income tax expense − Income tax deferred −
income taxes paid = End. taxes payable.
Therefore, income tax expense = (End. taxes payable − Beg. taxes payable) +
income taxes deferred + income taxes paid = ($20,000) + $205,000 + $406,650
= $591,650

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Direct method-Cash paid for expenses
Topic: Spreadsheet preparation

4-85
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50. In its 2022 annual report to shareholders, Kinney Ltd reported the following
consolidated statement of cash flows for the years ended December 31:

2022 2021
Cash flow from operating activities:
Cash received from customers $197,942,040 $211,773,952
Cash paid to suppliers and employees (191,276,791) (200,474,336)
Interest paid, net (1,563,990) (2,098,523)
Income taxes paid (406,650) (542,250)
Cash provided by operations 4,694,609 8,658,843
Cash flow from investing activities:
Capital expenditures and acquisitions (3,003,579) (1,667,382)
Expenditures for other assets (43,560) (137,420)
Cash used in investing activities (3,047,139) (1,804,802)
Cash flow from financing activities:
Principal payments of long-term debt and lease (2,062,485) (6,370,175)
agreements
Addition to long-term debt and lease liability 3,068,378 1,434,847
Purchase of ordinary shares and other capital (1,605,906) (908,231)
transactions
Payment of dividends (855,558) (1,021,968)
Cash provided by (used in) financing activities (1,455,571) (6,865,527)
Net increase (decrease) in cash 191,899 (11,486)
Cash at beginning of year 192,615 204,101
Cash at end of year $384,514 $192,615
Reconciliation of net profit to net cash provided
by operations:
Net profit $1,747,833 $2,382,027
Depreciation and amortization 3,505,504 3,525,087
Deferred income taxes 205,000 344,766
Changes in assets and liabilities, net of
acquisitions:
Decrease (increase) in receivables (2,897,353) 4,120,668
Decrease (increase) in inventories (355,508) 6,041,490
Increase (decrease) in prepaid expenses 361,648 (94,350)
Increase (decrease) in controlled 373,394 83,718
disbursements
Increase (decrease) in accounts payable 1,768,676 (8,164,148)
Increase (decrease) in accrued expenses (14,585) 417,616
Other, net 1,969
Cash provided by operations $4,694,609 $8,658,843

Required:
Kinney reported cost of goods sold of $168,114,150 in its financial year 2022

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 statement of profit or loss. Compute Kinney's net inventory purchases during the
year.

Assuming that there were no inventory write-downs, the computation is as follows:

COGS = Beg. inventory + net purchases − End. inventory. Therefore,

net purchases = COGS + (End. inventory − Beg. inventory)
= $168,114,150 + 355,508
= $168,469,658

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Direct method-Cash paid to suppliers
Topic: Spreadsheet preparation

4-87
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51. In its 2022 annual report to shareholders, Kinney Ltd reported the following
consolidated statement of cash flows for the years ended December 31:

2022 2021
Cash flow from operating activities:
Cash received from customers $197,942,040 $211,773,952
Cash paid to suppliers and employees (191,276,791) (200,474,336)
Interest paid, net (1,563,990) (2,098,523)
Income taxes paid (406,650) (542,250)
Cash provided by operations 4,694,609 8,658,843
Cash flow from investing activities:
Capital expenditures and acquisitions (3,003,579) (1,667,382)
Expenditures for other assets (43,560) (137,420)
Cash used in investing activities (3,047,139) (1,804,802)
Cash flow from financing activities:
Principal payments of long-term debt and lease (2,062,485) (6,370,175)
agreements
Addition to long-term debt and lease liability 3,068,378 1,434,847
Purchase of ordinary shares and other capital (1,605,906) (908,231)
transactions
Payment of dividends (855,558) (1,021,968)
Cash provided by (used in) financing activities (1,455,571) (6,865,527)
Net increase (decrease) in cash 191,899 (11,486)
Cash at beginning of year 192,615 204,101
Cash at end of year $384,514 $192,615
Reconciliation of net profit to net cash provided
by operations:
Net profit $1,747,833 $2,382,027
Depreciation and amortization 3,505,504 3,525,087
Deferred income taxes 205,000 344,766
Changes in assets and liabilities, net of
acquisitions:
Decrease (increase) in receivables (2,897,353) 4,120,668
Decrease (increase) in inventories (355,508) 6,041,490
Increase (decrease) in prepaid expenses 361,648 (94,350)
Increase (decrease) in controlled 373,394 83,718
disbursements
Increase (decrease) in accounts payable 1,768,676 (8,164,148)
Increase (decrease) in accrued expenses (14,585) 417,616
Other, net 1,969
Cash provided by operations $4,694,609 $8,658,843

Required:

4-88
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 Assuming the decrease in accrued expenses during financial year 2022 included a
$14,000 reduction due to interest on debt, compute the interest expense (net) for
Kinney in that year.

The reduction in accrued expenses is actually a reduction in interest payable, a

liability. Therefore, Beg. interest payable + interest expense (net) − interest paid
= End. interest payable. Therefore, interest expense = (End. interest payable −
Beg. interest payable) + interest paid
= ($14,000) + 1,563,990
= $1,549,990

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Direct method-Cash paid for expenses
Topic: Spreadsheet preparation

4-89
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52. In its 2022 annual report to shareholders, Kinney Ltd reported the following
consolidated statement of cash flows for the years ended December 31:

2022 2021
Cash flow from operating activities:
Cash received from customers $197,942,040 $211,773,952
Cash paid to suppliers and employees (191,276,791) (200,474,336)
Interest paid, net (1,563,990) (2,098,523)
Income taxes paid (406,650) (542,250)
Cash provided by operations 4,694,609 8,658,843
Cash flow from investing activities:
Capital expenditures and acquisitions (3,003,579) (1,667,382)
Expenditures for other assets (43,560) (137,420)
Cash used in investing activities (3,047,139) (1,804,802)
Cash flow from financing activities:
Principal payments of long-term debt and lease (2,062,485) (6,370,175)
agreements
Addition to long-term debt and lease liability 3,068,378 1,434,847
Purchase of ordinary shares and other capital (1,605,906) (908,231)
transactions
Payment of dividends (855,558) (1,021,968)
Cash provided by (used in) financing activities (1,455,571) (6,865,527)
Net increase (decrease) in cash 191,899 (11,486)
Cash at beginning of year 192,615 204,101
Cash at end of year $384,514 $192,615
Reconciliation of net profit to net cash provided
by operations:
Net profit $1,747,833 $2,382,027
Depreciation and amortization 3,505,504 3,525,087
Deferred income taxes 205,000 344,766
Changes in assets and liabilities, net of
acquisitions:
Decrease (increase) in receivables (2,897,353) 4,120,668
Decrease (increase) in inventories (355,508) 6,041,490
Increase (decrease) in prepaid expenses 361,648 (94,350)
Increase (decrease) in controlled 373,394 83,718
disbursements
Increase (decrease) in accounts payable 1,768,676 (8,164,148)
Increase (decrease) in accrued expenses (14,585) 417,616
Other, net 1,969
Cash provided by operations $4,694,609 $8,658,843

Required:

4-90
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 Kinney reported cost of goods sold of $168,114,150 in its financial year 2022
statement of profit or loss Assuming that Kinney uses accounts payable strictly for
inventory purchases and that all such purchases are on credit, how much cash did
Kinney pay during the year for inventories to inventory suppliers? To employees?

Assuming that there were no inventory impairments, the computation is as

follows:

COGS = Beg. inventory + net purchases − End. inventory. Therefore,

net purchases = COGS + (End. inventory − Beg. inventory)
= $168,114,150 + 355,508
= $168,469,658
End. acct. payable = Beg. acct. payable + net inventory purchases − cash paid to
suppliers
Therefore,
(End. acct. payable − Beg. acct. payable) + cash paid to suppliers = net inventory
purchases $1,768,676 + cash paid to suppliers = $168,469,658
Cash paid to suppliers = $168,469,658 − $1,768,676 = $166,700,982

Cash paid to suppliers and employees is $191,276,791. Therefore,

Cash paid to employees
= $191,276,791 − $166,700,982
= $24,575,809

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Direct method-Cash paid for expenses
Topic: Direct method-Cash paid to suppliers
Topic: Spreadsheet preparation

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53. Following are the statement of profit or loss and some additional information for
Carolina Consulting Company.

Carolina Consulting Company

Statement of Profit or Loss
for the Year Ended December 31, 2022
Net sales $10,000
Cost of goods sold (1,500)
Gross margin 8,500
Operating expenses $2,000
Depreciation expense 900 (2,900)
Profit before taxes 5,600
Income taxes (1,600)
Net profit $4,000

All sales were on credit and accounts receivable decreased by $900 in 2022
compared to 2021. Merchandise purchases were on credit with a decrease in
accounts payable of $700 during the year. Ending inventory was $500 larger than
beginning inventory. Income taxes payable increased $300 during the year. All
operating expenses were paid for in cash.

Required:

Prepare the cash flows from the operating activities section of the statement of
cash flows for 2022 using the direct method.

Direct Method

Cash flows from operating activities:

Cash received from customers ($10,000 + $900) $10,900
Cash paid to suppliers ($1,500 + $500 + $700) (2,700)
Cash paid for operating expenses (2,000)
Cash paid for taxes ($1,600 − $300) (1,300)
Net cash flows from operating activities $4,900

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Prepare part or all of the Statement

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54. Following are the statement of profit or loss and some additional information for
Carolina Consulting Company.

Carolina Consulting Company

Statement of Profit or Loss
for the Year Ended December 31, 2022
Net sales $10,000
Cost of goods sold (1,500)
Gross margin 8,500
Operating expenses $2,000
Depreciation expense 900 (2,900)
Profit before taxes 5,600
Income taxes (1,600)
Net profit $4,000

All sales were on credit and accounts receivable decreased by $900 in 2022
compared to 2021. Merchandise purchases were on credit with a decrease in
accounts payable of $700 during the year. Ending inventory was $500 larger than
beginning inventory. Income taxes payable increased $300 during the year. All
operating expenses were paid for in cash.

Required:

Prepare the cash flows from the operating activities section of the statement of
cash flows for 2022 using the indirect method.

Indirect Method

Cash flows from operating activities:

Net profit $4,000
Adjustment for noncash effects:
Depreciation expense 900
Changes in operating assets and liabilities:
Decrease in accounts receivable 900
Increase in inventory (500)
Decrease in accounts payable (700)
Increase in income taxes payable 300
Net cash flows from operating activities $4,900

AACSB: Knowledge Application

AICPA: FN Measurement

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 Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 04-04 Determine cash flows from operating activities by the indirect method.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Prepare part or all of the Statement

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55. The Murdock Corporation reported the following statement of financial position
data for 2022 and 2021:

2022 2021
Cash $77,375 $22,955
Available-for-sale debt securities
(not cash equivalents) 15,500 85,000
Accounts receivable 80,000 68,250
Inventory 165,000 145,000
Prepaid insurance 1,500 2,000
Land, buildings, and equipment 1,250,000 1,125,000
Accumulated depreciation (610,000) (572,000)
Total assets $979,375 $876,205
Accounts payable $76,340 $148,670
Salaries payable 20,000 24,500
Notes payable (current) 25,000 75,000
Bonds payable 200,000 0
Ordinary share capital 300,000 300,000
Retained earnings 358,035 328,035
Total liabilities and shareholders' equity $979,375 $876,205

Additional information for 2022:

(1) Sold available-for-sale debt securities costing $69,500 for $74,000.

(2) Equipment costing $20,000 with a book value of $5,000 was sold for $6,000.
(3) Issued 6% bonds payable at principal amount, $200,000.
(4) Purchased new equipment for $145,000 cash.
(5) Paid cash dividends of $20,000.
(6) Net profit was $50,000.

Required:

Assume that Murdock classifies dividends paid as a financing activity. Prepare a

statement of cash flows for 2022 using the indirect method for cash flows from
operating activities.

Note: This can be solved in spreadsheet form if the instructor wishes.

Murdock Company
Statement of Cash Flows
for the Year Ended December 31, 2022

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 Cash flows from operating activities:
Net profit $50,000
Adjustments for noncash effects:
Depreciation expense 53,000
Gain on sale of available for sale debt securities (4,500)
Gain on sale of equipment (1,000)
Changes in operating assets and liabilities:
Increase in accounts receivable (11,750)
Increase in inventory (20,000)
Decrease in prepaid insurance 500
Decrease in accounts payable (72,330)
Decrease in salaries payable (4,500)
Net cash flows from operating activities $10,580
Cash flows from investing activities:
Sale of available-for-sale debt securities 74,000
Sale of equipment 6,000
Purchase of equipment (145,000)
Net cash flows from investing activities (65,000)
Cash flows from financing activities:
Sale of bonds payable 200,000
Payment of notes payable (50,000)
Payment of cash dividends (20,000)
Net cash flows from financing activities 130,000
Net increase in cash 54,420
Cash balance, January 1 22,955
Cash balance, December 31 $77,375

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 04-02 Identify transactions that are classified as operating activities.
Learning Objective: 04-04 Determine cash flows from operating activities by the indirect method.
Learning Objective: 04-05 Identify transactions that are classified as investing activities.
Learning Objective: 04-06 Identify transactions that are classified as financing activities.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Prepare part or all of the Statement

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McGraw-Hill Education.
56. The following are comparative statements of financial position and a statement of
profit or loss for Wentworth Company.

Wentworth Company
Statements of Financial Position
as of December 31
Assets 2022 2021
Cash $21,500 $120,000
Accounts receivable 195,000 105,000
Inventory 180,000 225,000
Long-term investments 0 60,000
Totals $396,500 $510,000
Liabilities and shareholders' equity
Accounts payable $75,000 $120,000
Operating expenses payable 24,000 15,000
Bonds payable 70,000 100,000
Ordinary share capital 125,000 125,000
Retained earnings 102,500 150,000
Totals $396,500 $510,000

Wentworth Company
Statement of Profit or Loss
for the Year Ended December 31, 2022
Sales $560,000
Cost of goods sold:
Beginning inventory $225,000
Purchases 330,000
Goods available for sale 555,000
Less: ending inventory 180,000
Cost of goods sold 375,000
Gross profit 185,000
Operating expenses 180,000
Profit from operations 5,000
Other expenses:
Loss on sale of long-term investment (7,500)
Net loss ($2,500)

Cash dividends of $45,000 were paid in 2022.

Required:

Assume that Wentworth classifies dividends paid as a financing activity. Prepare a

statement of cash flows for 2022 using the direct method.

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McGraw-Hill Education.
 Note: This can be solved in spreadsheet form if the instructor wishes.

Wentworth Company
Statement of Cash Flows
for the Year Ended December 31, 2022
Cash flows from operating activities:
Cash inflows:
From customers $470,000
Cash outflows:
To suppliers of goods (375,000)
For operating expenses (171,000)
Net cash flows from operating activities ($76,000)
Cash flows from investing activities:
Sale of long-term investments 52,500
Net cash flows from investing activities 52,500
Cash flows from financing activities:
Repayment of bonds (30,000)
Payment of cash dividends (45,000)
Net cash flows from financing activities (75,000)
Net decrease in cash (98,500)
Cash balance, January 1 120,000
Cash balance, December 31 $21,500

AACSB: Knowledge Application

AICPA: FN Measurement
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 04-02 Identify transactions that are classified as operating activities.
Learning Objective: 04-03 Determine cash flows from operating activities by the direct method.
Learning Objective: 04-05 Identify transactions that are classified as investing activities.
Learning Objective: 04-06 Identify transactions that are classified as financing activities.
Learning Objective: 04-08 Prepare a statement of cash flows with the aid of a spreadsheet or T-accounts.
Topic: Prepare part or all of the Statement

4-98
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McGraw-Hill Education.