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ACC 312 Study Guide - Midterm Guide: Cash Flow, Retained Earnings, Income Statement

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greenwalrus59
1 Dec 2017
School
UT-Austin
Department
Accounting
Course
ACC 312
Professor
B Lendecky

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Document Summary

Creating the statement of cash flows: the statement of cash flows should be prepared just as often as you prepare your income statement and balance sheet. In order to build a statement of cash flows, you will need the following: This will show the sources and uses of funds that will affect the cash changes reported on the statement of cash flows (see figure. Cash flow from operating activities: cash flow from operating activities is the result of all of the tra(cid:374)sa(cid:272)tio(cid:374)s a(cid:374)d eve(cid:374)ts that (cid:374)or(cid:373)ally (cid:373)ake up a (cid:271)usi(cid:374)ess"s day to day activities. These include cash generated from selling goods or providing services, as well as income from items such as interest and dividends. More important, however, depreciation is subtracted from the income statement primarily to lower income, and thus lower taxes. In order to adjust net income to reflect actual cash, then, depreciation must be added back as in.

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Related Questions

Which of the following statements are correct (Select all that apply): 

A. A balance sheet reports on investing and financing activities.

B. An income statement reports on financing activities.

C. The statement of equity reports on changes in the accounts that make up equity.

D. The statement of cash flows reports on cash flows from operating, investing, and financing activities over a period of time.

E. A balance sheet reports on a company's assets and liabilities over a period of time

Match the transaction to the financial statement:

1)Purchased land for $50,000 cash. Where does the land appear?

2)Received $50,000 cash for services. Where does the revenue appear?

3)Acquired $20,000 cash from the issue of common stock. Where does the common stock appear?

4)What statement reports all cash transactions from all sources?

_______________________________________________________________________________

A.

Retained Earnings
B.

Common Stock
C.

Balance sheet statement
D.

Income statement
E.

Statement of changes in stockholder equity
F.

The statement of cash flow

1.The income statement is linked to the balance sheetthrough:

A.The cash account

B.The stock account

C.The costs of goods sold

D.The retained earnings account

2.The sale of a birdbath on credit would affect all of thefollowing accounts except:

A.Cash

B.Accounts receivable

C.Costs of goods sold

D.Inventory

3.The purchase of a copy machine with a useful life of 5 yearswould affect which of the following?

A.Fixed Assets ( PPE)

B.Investments

C.Inventory

D.Retained earnings

4.Receiving cash from customer who owed a balance from a salemade in the previous accounting period would:

A.Increase gross margin on the income statement

B.Increase total assets on the balance sheet

C.Increase retained earnings on the balance sheet

D.None of the above

5.The interest paid on a note payable would be classified asa(n):

A.Financing activity on a statement of cash flows

B.Operating activity on a statement of cash flows

C.Repayment activity on a statement of cash flows

D.Investing activity on a statement of cash flows

6.The sale of long term bonds payable would be classified asa(n):

A.Financing activity on a statement of cash flows

B.Operating activity on a statement of cash flows

C.Repayment activity on a statement of cash flows

D.Investing activity on a statement of cash flows

7.The proceeds from the sale of land that had been held forinvestment purposes would be classified as a(n):

A.Financing activity on a statement of cash flows

B. Operating activity on a statement of cash flows

C. Repayment activity on a statement of cash flows

D.Investing activity on a statement of cash flows

8. Under the accrual basis of accounting, the difference betweenthe ending cash balance and the cash balance at the beginning ofthe period will be the same as net income for the period.

A.True B. False