Accounting and Finance Foundations

Unit 7

Accounting and Finance Foundations Unit 7: Financial Statements 594

Financial Statements

15. A decrease in the current liability income taxes payable

Operating Investing Financing

16. The proceeds from issuing additional common stock

Operating Investing Financing

17. The amortization of the cost of an intangible asset

Operating Investing Financing

For items 18 – 29, circle “Positive” or “Negative” based on whether each particular item would have a posi-

tive or negative effect on cash.

A positive effect could also be thought of as a source of cash, an increase in cash, or a positive amount on

the cash flow statement.

A negative effect could also be thought of as a use of cash, a decrease in cash, or a negative amount on

the cash flow statement.

18. An increase in the balance of prepaid insurance Positive Negative


19. A decrease in supplies on hand Positive Negative


20. The proceeds from the sale of equipment formerly used in the business Positive Negative


21. The loss on the sale of equipment in the previous question Positive Negative


22. An increase in the current liability income taxes payable Positive Negative


23. A decrease in accounts payable Positive Negative


24. An increase in accounts receivable Positive Negative


25. An increase in the current liability warranty liability Positive Negative


26. Dividends declared and paid Positive Negative


27. Proceeds from the issuance of preferred stock Positive Negative


28. The gain on the sale of equipment formerly used in the business Positive Negative


29. An increase in the long-term asset investment in another company Positive Negative


30. For a recent year a corporation’s financial statements reported the following:
    Net income $100,000
    Depreciation Expense 10,000
    Increase in Accounts Receivable 30,000
    Decrease in Accounts Payable 15,000
    Based on the above information, what amount should the corporation report as cash provided by
    operating activities on the cash flow statement?
    $65,000 $125,000 $155,000

Chapter 18Chapter 18

Student Assignment

18.5.5 Statement of Cash Flow Questions (cont’d)