101) Under the direct method, cash receipts from dividend revenue affect both the cash flow statement and the income statement.
102) Cost of Goods Sold and Inventory are the only two accounts needed to analyze the cash payments for inventory.
103) Cash collections from customers during the period can be computed as the ending balance in Accounts Receivable plus Sales during the period minus the beginning balance in Accounts Receivable.
104) If Dividends Payable decreased during the period, then cash paid for dividends exceeded dividends declared during the current year.
105) Why is the cash flow statement of interest to investors, creditors, and management?
106) Why is the cash flow statement necessary?
107) Your best friend just lost his job because the company he was working for went bankrupt. He was complaining to you that even though the company had been profitable for three years in a row, it still went out of business. He asks you how this can happen.
Explain the most likely reason for the company declaring bankruptcy. Could your best friend have seen it coming? How?
108) What primary factor should a creditor consider when evaluating whether a corporation can pay the interest and principal on a loan at maturity?
109) Classify each of the following as an operating, investing, or financing activity.
a.Loaning money
b.Receiving cash from customers
c.Receiving interest revenue
d.Payments for inventory
e.Payments for interest
f.Receipt of cash from issuance of bonds payable
g.Receipt of cash from sale of equipment
h.Payments for acquisition of land
i.Receipt of cash from issuance of stock
j.Receipt of dividend income
k.Dividends paid to shareholders
l.Payment of salaries to employees
m.Payment of taxes
110) Match these sections off of the balance sheet with their typical cash flow activity category.
Use O for operating, I for investing and F for financing.
Owners' Equity
Current Assets
Long-Term Liabilities
Current Liabilities
Long-Term Assets