A firm purchased cash equivalents

A firm purchased cash equivalents

Subject: Business    / Accounting
Question

A firm purchased cash equivalents. Choose the correct reporting for this purchase for the direct method SCF.

a. operating cash outflow

b. investing cash outflow

c. financing cash outflow

d. reconciling item

e. not reported in the SCF

You are almost finished preparing your firm’s full SCF. But after completing the first two steps in the format free approach that you learned in class, there remains one account whose change for the period hasn’t been explained. That account is retained earnings which increased $430 million for the period. Net income for the period was $600 million, and dividends payable increased $20 million for the period. Choose the correct line item for the SCF (in millions).

a. F: (150)

b. F: (170)

c. O: (170)

d. O: (150)

e. R: 20

You are examining the comparative balance sheets of a firm and find that although the Bonds Payable account did not change during the year, the Bond Discount account decreased $12,000. The 6%, $800,000 bonds were issued on January 1 many years ago and pay interest every June 30 and December 31. The yield rate was 7% on the date of issuance. For the direct method SCF, what is the complete reporting for this information (in millions)?

a. O: (56,000); R: 14,000

b. O: (48,000)

c. O: (48,000); R: 12,000

d. R: 12,000

e. O: (56,000); R: 12,000

An engineering firm requires its clients to advance a significant portion of the contract price before work is started. For the current year, the income statement reported $20 million of revenue, and the comparative balance sheets showed that unearned revenue increased $4 million. For the direct method SCF, what is the complete reporting for this information (in millions)?

a. O: 24

b. O: 24; R: 4

c. R: (4)

d. O: 16; R: 4

e. O: 16; R: (4)