Chapter /3 227 12. Caldwell Company had cash flows from operating activities of
ID: 2589254 • Letter: C
Question
Chapter /3 227 12. Caldwell Company had cash flows from operating activities of $290,000. totaled $32,000. Cash flows used for purchasing property, plant, and Depreciation expense for the year was $25,000. Cash flows for dividends equipment to maintain existing operations was $60,000. What is the free cash flow? a. $193,000 b. $218,000 c. $230,000 d. $250,000 TRUE/FALSE Instructions: Indicate whether each of the following statements is true or false by placing a check mark in the appropriate column. True False 1. The statement of cash flows is required as part of the 2. Cash outflows from the payment of cash dividends is a 3. Cash receipts from the sale of fixed assets would be 4. Under the direct method, depreciation is the first noncash 5. Under the indirect method, increases in current liabilities type of financing activity._ classified as a cash flow from investing activities.. account balance analyzed.... are deducted from net income reported on the income statement in determining cash flows from operating activities.. Noncash investing and financing activities that may have a significant effect on future cash flows should be included in aseparate schedule to the statement of cash flows. 6. 7. The correct amount to include in cash flows from financing activities is cash dividends paid, not cash dividends declared 8. The analysis of retained earnings provides a starting point for determining cash flows from operating activities under 9. The direct method provides a more accurate figure of cash flows from operating activities than does the indirect method. 10. Under the direct method, the increase in the trade receivables account is deducted from sales to determine the cash received from customers.....Explanation / Answer
Answer 12-c. $230,000 Free Cash Flow = $290,000 (Cash Flow from Operating Activities) - $60,000 (Property, Plant & Equipment Purchased) Free Cash Flow = $230,000 Answer 1. True Basic Set of Financial Statements Commonly prepared by Company: 1. Balance Sheet 2. Income Statement 3. Cash Flow Statement 4. Statement of Changes in Equity Answer 2. True The Financing activity of Cash Flow Statement shows how a company raises its capital and pays to its investors. The paying of dividends to shareholders is just paying back to stockholders (Investors) as part of thir share in profits. Answer 3. True The Investing Activity of Cash Flow Statement shows how cash is used for purchase and sale of tangible or intangible assets. The Sale of Fixed assets is a a type of investing activities, if the fixed assets is sold in cash.
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