Cash Flow Statement .Questions 24 to 32 (Effects of transactions on Statement of

Question

Cash Flow Statement .Questions 24 to 32 (Effects of transactions on Statement of Cash Flows using U.S. GAAP and assuming the indirect method) Cash flows from operating activities-Net income will be increased or adjusted upward. Cash flows from operating activities-Net income will be decreased or adjusted downward. Cash flows from investing activities Cash flows from financing activities Reported as significant noncash investing and financing activities, or not required to be reported on the cash flow statement A. B. C. D. E. 24. Equipment which originally cost $20,000 and has a book value of 2000 is sold for $2,500 during the year. Where 25. Equipment which originally cost $10,000 and has a book value of $4,000 is sold for $1,500 cash during the year. 26. The company issued 1,000 shares of Common Stock (par value equal to $2.00) to acquire a parcel of land worth is the $500 gain reported on the CFS? Where is the S1,500 reported on the CFS? $1,500,000

Explanation / Answer

24. B. Cash flow from operating activities - net income will be decreased or adjusted downward. $500 gain on sale of equipment will be deducted from the net income.

25. C. Cash flows from investing activties. $1500 is the amount the equipment is sold for and hence would be reported in cash flow from investing activties.

26. E. Reported as significant noncash investing and financing activities

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