108. Jarvis Company reported revenue of $124,000 on its 2011 income statement. The balance in its Unearned Revenue account was $6,000 at the start of 2011 and $2,000 at the end of the year. Based on this information alone, the amount of cash that Jarvis collected from customers for 2011 was $120,000.
109. The direct method of preparing the statement of cash flows is preferred by the Financial Accounting Standards Board.
110. The indirect method for preparing the statement of cash flows begins with the amount of sales revenue reported on the income statement.
111. In preparing the statement of cash flows by the indirect method, increases in current assets are added to net income.
112. In preparing the statement of cash flows by the indirect method, decreases in current liabilities are deducted from net income.
113. In preparing the statement of cash flows by the indirect method, noncash revenues and gains are added to net income.
114. For many companies, cash flow from operating activities exceeds income from operations, due to the effect of depreciation, which decreases income from operations but does not decrease cash.
115. Rapid growth of a company can cause it to be short of cash.
116. FASB requires that companies report cash flow per share in their audited financial statements.
117. Cash flow from operating activities is often more stable from year to year than is the amount of net income reported on the income statement.
118. The investing activities section of the statement of cash flows distinguishes between acquisitions of long-term assets that expand operating capacity and those that replace old, worn-out assets.
119. The direct method of preparing the statement of cash flows shows the specific sources and uses of cash associated with operating activities.
120. When the direct method is used to prepare the statement of cash flows, cash inflows from customers and cash outflows for depreciation are among the categories of cash flows likely to be reported.
121. The amount of increases in current asset accounts is added to revenues to calculate the amount of cash inflow from revenues when using the direct method to prepare the statement of cash flows.