财务会计英文版课后习题答案Ch13.docx

财务会计英文版课后习题答案Ch13.docx

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财务会计英文版课后习题答案Ch13

CHAPTER13

DISCUSSIONQUESTIONS

1.Themainpurposeofastatementofcashflowsistoprovideinformationaboutthecashreceiptsandcashpaymentsofanentityduringaperiodoftime.Thestatementofcashflowsalsoexplainsthechangesinthebalancesheetaccountsandthecasheffectsoftheaccrual-basisamountsreportedintheincomestatement.Inadditiontooperatingactivities,italsoprovidesinformationaboutanentity’sinvestingandfinancingactivities.Thisinformationshouldassistinvestorsandcreditorsinassessinganentity’sabilitytogeneratepositivefuturecashflows.

2.Cashequivalentsareshort-term,highlyliquidinvestmentsthatcanbeconvertedeasilyandquicklytocash.ExamplesincludeU.S.Treasurybills,moneymarketfunds,andcommercialpaper.Cashequivalentsaretobeincludedascash（i.e.,addedtocash）onastatementofcashflows.

3.Cashflowsfromoperatingactivitiesincludethoseitemsthatenterintothedeterminationofnetincome.Examplesarecashreceiptsfromthesaleofgoodsorservicesandfrominterest,andcashpaymentsforinventory,wages,taxes,interest,etc.

Cashflowsfrominvestingactivitiesresultfromtransactionsandeventsinvolvingthepurchaseorsaleofsecurities（otherthantradingsecurities）,property,plant,andequipment,andotherassetsnotgenerallyheldforresale,andthemakingandcollectingofloans.Examplesincludetheproceedsfromthesaleofequipment,thepurchaseofabuilding,thesaleofabusinesssegment,thecollectionoftheprincipalamountonaloantoanotherentity,andthepurchaseofanotherentity’sequitysecurities（notheldastradingsecurities）.

Cashflowsfromfinancingactivitiesresultfromtransactionsandeventswhereby

resourcesareobtainedfromorpaidtoowners（equityfinancing）andcreditors（debtfinancing）.Examplesincludecashreceivedfromthesale（issuance）ofstock,cash

receivedfromabankloanorbyissuingbonds,dividendpaymentstostockholders,orcashusedtorepurchaseanentity’sownstock（treasurystock）.

4.Significantnoncashinvestingandfinancingtransactionsaretobereportedseparatelyinaschedulebelowthestatementofcashflowsorinthenotestothefinancialstatements.Becausetheydonotinvolvecash,theyshouldnotbereportedinthebodyofthestatementitself.

5.Theprocessofconvertingfromaccrualrevenuestocashreceiptsinvolvesadjustingthebeginningandendingreceivablebalances.WeuseSalesRevenueand

AccountsReceivabletoillustratetheprocess.

Salesrevenue$100,000

+Beginningaccountsreceivable50,000

–Endingaccountsreceivable（40,000）

=Cashreceivedfromcustomers$110,000

Alternatively,thedecreaseintheaccountsreceivablebalancecouldbeaddedtosalesrevenuetoderivethe$110,000cash

receivedfromcustomers.

6.Byanalyzingtheincomestatementandcomparativebalancesheets,thefollowingsix-stepprocesscanbeusedtoprepareastatementofcashflows.

1.Computethechangeincashandcash-equivalentaccountsfortheperiodofthestatement（month,year,etc.）.Thisistheamountthatwillreconcilethebeginningandendingcashbalances.

2.Converttheincomestatementfromanaccrual-basistoacash-basissummaryofoperationsby（a）eliminatingany

expensesthatdonotinvolvecash（e.g.,depreciation）,（b）eliminatingtheeffectsofnonoperatingactivityitems（e.g.,gainsorlossesfromthesaleoflong-termassetsnotheldforresale）,and（c）analyzingallnoncashcurrentoperatingaccountstoreportrevenuesand

expensesonacashbasis.

3.Analyzelong-termassetstoidentifythecashfloweffectsfrominvestingactivities.

4.Analyzelong-termdebtandstockholders’equityaccountstodeterminethecashfloweffectsfromfinancingactivities.

5.Prepareaformalstatementofcashflowsbyclassifyingallcashinflowsandoutflowsaccordingtooperating,investing,andfinancingactivities.Thenetcashflowsfortheperiodshouldbeequaltotheamountcomputedinstep1.Thenetcashflowsfortheperiodareaddedtothebeginningcashbalancetoequaltheendingcashbalance.

6.Reportanysignificantnoncashinvestingorfinancialtransactionsinanarrativeexplanationorinaseparatescheduletothestatementofcashflows.

7.Thenetcashflowsprovidedby（usedin）operatingactivitiescanbecalculatedby

eitherthedirectortheindirectmethod.Thedirectmethodreportsalloperatingcash

receiptsandpayments.Thedifferenceisthenetcashflowsfromoperations.Theindirectmethodreconcilesnetincome,asreportedontheincomestatement,withnetcashflowsfromoperations,ascalculatedonthecashflowsstatement.Thus,withtheindirectmethod,accrualnetincomeisconvertedtoacashbasisonthestatementitself.

8.Depreciationandsimilarnoncashitemsshouldnotbereportedonastatementof

cashflows.Theindirectmethodstartswithnetincome.Becausetheseitemshavebeenincludedinnetincome,theymustbeaddedtoorsubtractedfromnetincome.Withthedirectmethod,theyaresimplyignored.

9.Anysignificantnoncashtransactions（e.g.,thepurchaseofabuildingortheretirementoflong-termdebtbyissuingstock）shouldbereportedinanarrativeinthenotestothefinancialstatementsorinaseparateschedulebelowthestatementofcashflows.Also,ifthedirectmethodisusedtoreportcashflowsfromoperations,anoteorschedulemustbeincludedthatreconcilesnetincometonetcashflowsfromoperations.Iftheindirectmethodisused,disclosuremustbemadeoftheamountsofcashpaidforinterestandincometaxes.

10.Investorsandcreditorsmightuseastatementofcashflowstobetterassesstheamounts,timing,anduncertaintiesoffuturecashflows.Thisknowledgecanhelpthemtonoticeacompany’sshiftsinoperating,

investing,andfinancingpolicies.Itprovidesanswerstospecificquestions,suchas:

Whyweren’tdividendpaymentslarger?

Howwasanewbuildingfinanced?

Whyisthecompanyshortoncashwhenearningshave

increased?

PRACTICEEXERCISES

PE13–1（LO2）CategoriesofCashInflowsandOutflows

ThecorrectanswerisA.AnswersB,C,andDarethemaincategoriesofthestatementofcashflows.Thoseactivitiesthatmightbeclassifiedas“earningactivities”arepresentedmainlyintheoperatingactivitiessectionofthestatementofcashflows.

PE13–2（LO2）IdentifyingOperatingActivities

ThecorrectanswerisB.

a.Thisisanexampleofafinancingactivity.

b.Thisisanexampleofanoperatingactivity.

c.Thisisanexampleofaninvestingactivity.

d.Thisisanexampleofafinancingactivity.

PE13–3（LO2）IdentifyingInvestingActivities

ThecorrectanswerisD.

a.Thisisanexampleofanoperatingactivity.

b.Thisisanexampleofafinancingactivity.

c.Thisisanexampleofanoperatingactivity.

d.Thisisanexampleofaninvestingactivity.

PE13–4（LO2）IdentifyingFinancingActivities

ThecorrectanswerisB.

a.Thisisanexampleofaninvestingactivity.

b.Thisisanexampleofafinancingactivity.

c.Thisisanexampleofanoperatingactivity.

d.Thisisanexampleofaninvestingactivity.

PE13–5（LO3）ComputingNetChangeinCashforthePeriod

Theendingcashbalanceis$243,asshownbelow:

Cashprovidedby（usedin）:

Operatingactivities$3,460

Investingactivities（3,730）

Financingactivities298

Netincreaseincashandcashequivalents$28

Cashatbeginningofyear215

Cashatendofyear$243

PE13–6（LO3）ComputationofCashfromOperatingActivities

Cashprovidedbyoperatingactivitiesis$203,asshownbelow:

Collectionsonaccount$4,286

Paymentsforinventory（2,874）

Paymentsformiscellaneousexpenses（1,031）

Paymentforinterest（43）

Paymentfortaxes（135）

Cashflowsfromoperatingactivities$203

Note:

Paymentstostockholdersasdividendsarefinancingactivitiesanddonotappearontheoperatingactivitiessectionofthestatementofcashflows.

PE13–7（LO3）SolvingforCashfromInvestingActivities

Cashusedininvestingactivitiesis（$221,665）,asshownbelow:

Endingcashbalance$13,405

Less:

Beginningcashbalance（12,540）

Changeincashaccountfortheyear$865

Cashfrom（usedin）operatingactivities$136,190

Cashfrom（usedin）financingactivities86,340

Cashfrom（usedin）investingactivities（221,665）

Changeincashaccountfortheyear$865

PE13–8（LO4）UsingAccountsReceivabletoComputeCashCollections

Thecompanycollected$4,557fromitscustomers,asshownbelow:

Salesonaccount$4,526

Add:

Beginningaccountsreceivable512

Less:

Endingaccountsreceivable（481）

Collectionsonaccount$4,557

AnotherwaytoconsiderthisproblemistomakeaT-accountwiththeinformationprovidedandsolvefortheunknown,asshownbelow:

AccountsReceivable

Beg.Bal.

512

Sales

4,526

Collections

?

?

End.Bal.

481

Toreconciletheaccountsreceivableaccount,wecanonlyassumethatcashcollectionsof$4,557occurred.

PE13–9（LO4）IdentifyingNoncashFlowItemsandNonoperatingActivityItems

Thegainonsaleofland（$540）wouldbesubtractedfromnetincome,anddepreciationexpense（$1,785）wouldbeaddedbacktonetincomewhencomputingcashfromoperatingactivities.Gainonsaleoflandrelatestoinvestingactivities（notoperatingactivities）,anddepreciationexpenseisanoncashitem.

PE13–10（LO4）UsingInventoryandAccountsPayabletoComputeCashPaidforInventory

Tosolvethisproblem,considerthefollowingfourT-accounts:

Inventory

AccountsPayable

CostofGoodsSold

3,110

2,576

36,8431

36,8431

36,7152

36,7152

36,5733

2,982