Question

Complete the following using the information from the Study Questions and Problems at the end of Chapter 4, on pages 191 - 192, as indicated below:

Question 4.5 - Using the information in the problem on pages 191 - 192, you will provide whether the items listed in (a) through (l) are included in investing or financing activities

Question 4.6 - Using the information in the problem on page 192, you will provide whether the current assets and liabilities listed in (a) through (l) are included in cash, operating, investing, or financing activities.

Question 4.7 - Using the information in the problem on page 192, you will provide whether the items (a) through (j) will result in net cash flow from operating activities being higher or lower than net income.

Question 4.8 - Using the information in the problem on page 192, you will provide whether the events listed in (a) through (j) would cause an inflow or outflow of cash and whether it would affect investing or financing activities on the statement of cash flows.

CHAPTER 4 Statemento The following information is available for jacquais TER 4 Statement of Cash Flows 1 e for Jacqui's Jewelry and Gift Store Net income Depreciation expense Increase in deferred tax liabilities Decrease in accounts receivable Increase in inventories Decrease in accounts payable Increase in accrued liabilities Increase in property and equipment Increase in short-term notes payable Decrease in long-term bonds payable $ 5,000 2,500 500 2,000 9,000 5,000 1,000 14,000 19,000 4,000 Use the indirect method to answer questions 23-26. 23. What is net cash flow from operating activities? (a) ($3,000) (b) ($1,000) (c) $5,000 (d) $13,000 24. What is net cash flow from investing activities? (a) $14,000 (b) ($14,000) (c) $21,000 (d) ($16,000) 25. What is net cash flow from financing activities? (a) $15,000 (b) ($15,000) (c) $17,000 (d) ($14,000) 26. What is the change in cash? (a) ($3,000) b) $3,000 $2,000 d) ($2,000) STUDY QUESTIONS AND PROBLEMS 4.1. Why is the statement of cash flows a useful document? 4.2. Define the following terms as they relate to the statement of cash flows: cash, operating activities, investing activities, and financing activities. 4.3. How does the direct method differ from the indirect method? 4.4. What can creditors, investors, and other users learn from an analysis of the cash flow statement? 4.5. Identify the following as financing activities (F) or investing activities (1): (a) Purchase of equipment. (b) Purchase of treasury stock.

Answer 1

cash flow s Particulars of Jacque sewelery & Gift Ston Andrit Amount in amounting I. cash 5000 cash flow from operating actiu a) Net Income 6 Add Depreciation cupenses C) Add Increase in deferred taulab d) Add: Dechar mal receivable 2,500 (9,000) 1000 (3000) activity (14,000) 500 11.2000 e) Less. Increase in Inventories f) Lesse Decrear in ales payable (5000) 91 Add Increase in amond liabilitas u. Net cash flow used in operating & il a Il cash flow from Investing actinhu a) Increase in property & 1 Equipmut I purchase - deureau in cash) I i Net cast med kom lureby actinis. p. cash flow hom financing activities a) Increase m Short-terra noli poyab4 $ 19,000 Received cash) line by Deereau in long term bond payake (decrease in cam Net cash flow from Finantly actution an d Net cash & cash equivales for Il na (4000) 15000 (2000)

4.5 a) Purchase of equipment b purchase of treasury stoc e) Reduction of long term Sale of building e) Resale of treasurya f Increas in short ten quipment - Investing esung stock & Financing ing terondebt - Financing Investing Financing financers Financing 111 l treasury Stock - Short terms debt common stock - to inte 9) Issuance of common stock h) Purchase of land - Purchar of common Stow of anotur fim videon - Investing Investing Financong n 11 3 payment of cash dividend K) Gain of sale of ale of land te operating / Investing final Repayment of debt prinuple 4-6 carbonat din operatry I lood disorot Operating con ng & operatory d raid a) Accounts payable & operating, b) Accounts rearvable & Operating at c) Notes payable (to bank) oks & Financing o d) Marketable Securities - calbanon e) Acurred expenses - operatly I f) Inventory - Operating sa g) Prepaid expenses & Operating , hi current portion of long term & Financing debto In Dividend payable & Financing Income fare payable & Operating/ k Intrest payahce & Operating 1) Certificates of deposit - Financoy

lower Netancome a) Deenanin at payable ! Depreciation expense - Hight ) Deenan in Inventory & a san on sale of assets Increase in as receivable = 1) natam defned fans 3 Inventory - Higher ale of anely & Lower ate receivable = Lower deported tore & Highes. in 9 Decrease in b. Increase in = lower auand liabilities prepaid eaper liabilities e in prepaid expert & Low. Iporake i dekened revenue - H Dunar in Intert receivable = Higher Devenu = Higher A long-term debt = Outflow (financiry) table Secundus = InHow l Financing (man a) Repament of long-term debt - 6. Sales of marketable Seunhus - Info e) Repurchase of company common - Outflowe Slou d) sale of conmon Stock to - In how - Cima investon mon Stock - In How C Fmancing) Purchase of equipment – outflow (Investing) to payment of dividend = outflow (finanung) 9) purchase of markatable securities outflow (Financing) w Borrowing from bant - Inflow (Financing) sake of bullry - Inflow (Investing) 1) Acquistion of compay - outflow (Financing)