Q1. The primary source of cash for an established company with a strong cash position should be

Question:

Q1. The primary source of cash for an established company with a strong cash position should be (___________ / investing / financing) activities.
Q2a. OPERATING ACTIVITIES report cash transactions that typically affect (_____ / LTA / _____ / LTL / SE) accounts. (Circle all that apply)
b. INVESTING ACTIVITIES report cash transactions that typically affect (CA / _____ / CL / LTL / SE) accounts. (Circle all that apply)
c. FINANCING ACTIVITIES report cash transactions that typically affect (CA / LTA / CL / _____ / _____) accounts. (Circle all that apply)
Key: CA current asset; LTA long-term asset; CL current liability; LTL long-term liability; SE stockholders’ equity.
Q3a. Of the following accounts, circle those that are used to compute net income:
(______________ / ______________ / ______________ / dividends paid).
b. Decision makers compare “net income” to “net cash from operating activities.” To make these two amounts more comparable, it is preferable to report the same account information on both the income statement and the operating activity section of the statement of cash flows.
1. Because interest revenue, interest expense, and revenue are reported on the income statement, the cash received/paid for these items is reported in the (______________ / investing / financing) activity section on the statement of cash flows.
2. Because dividends paid are NOT reported on the income statement, they are also NOT reported on the statement of cash flows in the (______________ / investing / financing) activity section, but instead, are reported in the (operating / investing / ______________) activity section of the statement of cash flows.
Q4a. For a note receivable, receiving repayment of principal is a(n) (operating / ______________ / financing) activity, whereas receiving an interest payment is a(n) (______________ / investing / financing) activity.
b. For a loan payment, paying the principal is a(n) (operating / investing / ______________) activity, whereas paying the interest is a(n) (______________/ investing / financing) activity.
c. Issuing to shareholders is a(n) (operating / investing / ______________) activity and paying cash dividends to those shareholders is a(n) (operating / investing / ______________) activity.
Q5. Answer the questions that follow by referring to the statement of cash flow information below.
a. The company that appears to be borrowing money to finance operating activities is (Ford / Royal Caribbean / ______________).
b. The company that appears to be borrowing money to expand and grow is (Ford / ______________/ United Airlines).
c. The company that appears to be using amounts from operating activities to purchase property, plant, and equipment, repay debt, and pay dividends is (______________/ Royal Caribbean / United Airlines).
d. The company that appears to have the weakest cash position is (Ford / Royal Caribbean / ______________). Why?
Q6a. List three transactions that result in a cash inflow for investing activities.
b. List three transactions that result in a cash outflow from financing activities.
Q7. What does the statement of cash flows reveal about a company that the income statement does not?
Q8. Who can use the information on the statement of cash flows? For what purpose? Common Stock
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