The statement of cash flows is: Another name for the statement of financial posi

Question

The statement of cash flows is: Another name for the statement of financial position A financial statement that presents information about changes in equity during a period A financial statement that reports the cash inflows and outflows for an accounting period and that classifies those cash flows as operating activities, investing activities or financing activities A financial statement that lists the types and amounts of assets, liabilities and equity of a business on a specific date A financial statement that lists the types and amounts of the revenues and expenses of a business for an accounting period The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is: Operating activities Financing activities Investing activities Schedule of noncash investing or financing activity None of these as this is not reported on the statement of cash flows The appropriate section in the statement of cash flows for reporting the cash payment of wages is: Operating activities Financing activities Investing activities Schedule of noncash investing or financing activity None of these as this is not reported on the statement of cash flows Use the following information and the indirect method to calculate the net cash provided or used by operating activities: Cash Paid for purchase of plant assets....... $15,000 Decrease in interest payable.......................... 2,000 Depreciation expense.................................. 30,000 Gain on retirement of bonds............ 32,000 Increase in accounts receivable...................... 40, 000 Loss on sale of plant assets ............ ... 5,000 Net Income.................................... 76, 000 $22,000 $117,000 $69,000 $37,000 $91,000

Explanation / Answer

36. C. A financial statement that reports the acsh inflows and outflows for an accounting period and that classifies those cash flows as operating activities, financing activities and investing activities.

A cash flow statement provide a detailed analysis of where the cash went and where it came from. It classifies all the cash flows into three activities namely operating, financing and investing.

37. C. Investing Activities. Equipment is an asset for the business. Purchase of equipment means increasing the assets for the company thereby increasing investments. Thus purchase of equipment is an investing activity.

38. A. Operating Activities. Wages are paid to labours who contribute to the operations (eg. manufacturing process) in the business. This affects the operations of the company nad hence is identified as an operating activity.

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