1. Does a statement of cash flows disclose payments of cash to

purchase cash equivalents? Does it disclose receipts of cash

from selling cash equivalents?

2. Identify the categories of cash flows reported separately on

the statement of cash flows.

3. Identify the category for each of the following cash flow activities: (a) purchase of equipment for cash; (b) payment of

wages; (c) issuance of common shares for cash; (d) receipt of

cash dividends from share investment; (e) collection of cash

from customers; (f) issuance of bonds for cash.

4. Is the direct or indirect method of reporting operating cash

flows more informative? Explain. Which method is more common practice?

5. Determine the net cash inflows (outflows) from operating activities using the following data:

Profit $74,900

Decrease in accounts receivable 4,600

Increase in inventory 11.700

Decrease in accounts payable 1,000

Loss on sale of equipment 3,400

Payment of dividends 21,500

6. Why are expenses such as depreciation added to profit when cash flow from operating activities is calculated by the indirect method?

7. A company reports profit of $15,000 that includes a $3.000

gain on the sale of land. Why is this gain subtracted from profit in calculating cash flow from operating activities using the indirect method?

8. Equipment costing $80,000 with accumulated depreciation of $30,000 is sold at a loss of $10,000. What is the cash receipt from the sale? In what category of the statement of cash flows is it reported?

10. Net sales in a period is $590,000, beginning accounts receivable is $120,000, and ending accounts receivable is $90,000. What amount is collected from customers in the period?

11. The Merchandise Inventory account balance decreases in a period from a beginning balance of $32,000 to an ending balance of $28,000. Cost of goods sold for the period is $168,000. If the Accounts Payable balance increases $2,400 in the period, what is the amount of cash paid for merchandise?

12. Reported wages and other operating expenses incurred total

$112,000. At the end of the prior year, prepaid expenses totaled $1,200, and this year the balance is $4,200. The current balance sheet shows wages payable of $5,600, whereas last year's did not show any accrued liabilities. How much is paid for wages and other operating expenses this year?