Business Finance

Practice Questions

Topic: Cash flow statement

Question-1

Omni Corporation’s accumulated depreciation increased by $12,000, while $3,400 of patents

were amortized between balance sheet dates. There were no purchases or sales of depreciable or
intangible assets during the year. In addition, the income statement showed a gain of 4,100 from
the sale of land. Reconcile a net income of $50,000 to net cash flow from operating activities.

Question-2

From the following reported data, calculate operating cash flows.

Net Income = $120,000

Depreciation = $12,000
Loss on disposal of equipment = $15,000
Decrease in accounts receivable = $5,000
Increase in accounts payable = $2,000

Question-3

From the following reported data, calculate operating cash flows.

$
Depreciation 50,000
Gain on disposal of land 10,000
Decrease in income taxes payable 5,000
Increase in accounts receivable 2,500
Decrease in accrued expenses payable 9,000
Increase in inventory 9,000
Decrease in accounts payable 7,500
Increase in prepaid expenses 3,200
Net Income 70,000

Question-4

Alpha Corporation purchased land for $125,000. Later in the year, the company sold land with a book
value of $165,000 for $200,000. How are the effects of these transactions reported on the following cash
flows if Net income is $90,000?

i. Operating cash flows

ii. Investing cash flows
Question-5

From the following reported data, calculate cash flows from financing activities.

$
Dividends declared and paid 130,000
Cash received from issuance of common stock 400,000
Cash received from Bond issue 200,000
Cash paid for retirement of bond 165,000

Question-6

From the following reported data, calculate cash flows from financing activities.

$
Dividends paid 90,000
Cash received from issuance of common stock -
(50,000 shares @ $10 each)
Cash received from issuance of Bond-A 100,000
Cash received from issuance of Bond-B 250,000
Cash paid for retirement of debt 150,000

Question-7

Calculate the opening balance of cash from the given data:

Cash flows from operating activities = $300,000

Cash flows from financing activities = $150,000
Cash flows from investing activities = ($200,000)
Ending cash balance = 330,000

Question-8

Prepare Cash flow statement using indirect method from the data given:

$
Depreciation 50,000
Gain on disposal of land 5,000
Increase in income taxes payable 4,000
Decrease in prepaid expenses 6,000
Net Income 95,000
Cash from sale of land 165,000
Cash paid for purchase of machinery 300,000
Dividends paid 120,000
 Cash received from issuance of common stock 500,000
Cash received from Bond issue 100,000

Cash at beginning of the year = 20,000

Question-9

Prepare Cash flow statement using indirect method from the data given:

$
Decrease in income taxes payable 3,500
Decrease in accrued expenses payable 6,000
Increase in inventory 10,000
Decrease in accounts payable 5,000
Amortization 90,000
Loss on disposal of land 6,200
Net Income 95,000
Cash paid for purchase of equipment 250,000
Cash paid for purchase of machinery 55,000
Dividends paid 50,000
Cash received from stock issue (30,000 shares @ -
$10 each)

Cash at beginning of the year=50,000

 Business Finance
Assignment -1 Questions

Topic: Cash flow statement

Prepare Cash flow statement using indirect method from the data given:

$
Depreciation 80,000
Gain on disposal of land 25,000
Increase in income taxes payable 15,000
Increase in accounts receivable 8,000
Increase in accrued expenses payable 11,000
Decrease in inventory 9,000
Increase in accounts payable 5,000
Increase in prepaid expenses 4,000
Net Income 95,000
Cash from sale of land 520,000
Cash paid for purchase of building-B 420,000
Cash received from sale of building –A 78,000
Cash paid for purchase of machinery 40,000
Cash received from sale of office equipment 12,500
Dividends paid 128,000
Cash received from issuance of common 500,000
stock
Cash received from new stock issue (20,000 -
shares @ $5 each)
Cash received from Bond issue 100,000
Cash paid for retirement of bond 65,000
Cash at beginning of the year = 45,000
Question-2

Prepare Cash flow statement using indirect method from the data given:

$
Decrease in income taxes payable 5,000
Increase in accounts receivable 14,000
Increase in accrued expenses payable 6,300
Decrease in inventory 17,000
Decrease in accounts payable 8,000
Increase in prepaid expenses 22,000
Amortization 75,800
Loss on disposal of land 6,500
Net Income 65,000
Cash paid for purchase of land 480,000
Cash received from sale of building 125,000
Cash paid for purchase of machinery 147,000
Cash paid for purchase of office equipment 25,900
Dividends paid 80,000
Cash received from issuance of common stock 180,000
Cash received from new stock issue (150,000 -
shares @ $15 each)
Cash received from Bond-A issue 50,000
Cash received from Bond-B issue 40,000
Cash paid for retirement of bond-C 120,000

Cash at beginning of the year=95,000