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Managers only use the cash flow statement to evaluate the net cash increase or decrease, and do not pay much attention to the details of cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.

A financial statement providing information that helps users understand a company’s financial status, and which lists the types and amounts of assets, liabilities, and equity as of a specific date, is called a(n):

On April 1, a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What amount of the insurance expense will be reported on the annual income statement for the year ended December 31?

Both the direct and indirect methods yield the identical net cash flow amount provided or used by operating activities.

Refer to the following selected financial information from Elvis Corp. Compute the company’s inventory turnover for Year 2.    Year 2   Year 1   Merchandise inventory 271,000   253,500   Cost of goods sold 486,400   433,100  

Refer to the following selected financial information from Stellar Company. Compute the company’s debt to equity for Year 2.    Year 2 Year 1 Total assets $ 327,800   $ 301,000   Total liabilities   171,400     169,300   Total equity   156,400     131,700  

A noncash investing transaction should be disclosed in either a footnote or at the bottom of the statement of cash flows.

Subic Bay Company reports depreciation expense of $40,000 for Year 2. Also, equipment costing $240,000 was sold for a $10,000 loss in Year 2. The following selected information is available for Subic Bay Company from its comparative balance sheet. Compute the cash received from the sale of the equipment.  At December 31 Year 2 Year 1 Equipment $ 510,000   $ 750,000   Accumulated Depreciation-Equipment   328,000     500,000  

A customer’s promise to pay on credit is classified as an account payable by the seller.

Cash flow amounts and their timing should be considered when planning and analyzing operating activities.