[calicpa]

Is cash received from the sale of equipment included in operatin cash flows?

I’m not sure why the answer to the 2nd question is wrong when the answer states that it’s a operating CF. Please clarify these two answers. Thank you

A company calculated the following data for the period:

Cash received from customers $25,000

Cash received from sale of equipment 1,000

Interest paid to bank on note 3,000

Cash paid to employees 8,000

What amount should the company report as net cash provided by operating activities in its Statement of Cash Flows?

A. $14,000

B. $15,000

C. $18,000

D. $26,000

A is Correct!

Cash received from the customers and paid to employees are operating activities. Interest paid on a bank note is also an operating activity. Therefore, the cash for from operating activities is $25,000 – 3,000 – 8,000 = $14,000.

Which of the following transactions is included in the operating activities section of a cash flow statement prepared using the indirect method?

A. Gain on sale of plant asset.

B. Sale of property, plant and equipment.

C. Payment of cash dividend to the shareholders.

D. Issuance of common stock to the shareholders.

B is Incorrect…

The cash received on the sale of PPE is included in the operating section of the statement of cash flows.

BEC - 84, 4/6/13
AUD - 77, 5/28/13
REG - 83, 4/12/14
FAR - 83, 10/3/13

Ethics - 90% 4/24/13

150 unit education requirement met!
Work experience met!

[NYCaccountant]

We know Net Income was 300,000 after recording a depreciation expense of 52,000, which means that because this is a non – cash charge, it needs to be added back to net income. You have to reverse out the gain of 5,000 because this is not an operating activity on the statement of cash flows. 300,000+52,000-5,000=347,000. The rest of the information is irelevant because they are either investing,financing activities, or don't matter at all.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[RandomAlt]

I'm going to bring this topic back up to the top of the thread, because I want to thank NYCaccountant. I was literally just about to post the above Q to the FAR forum, but I decided to google it first. The only hit was in the another71 forums.

Thanks for the details above NYCaccountant. I totally missed that equipment and note payable accounts were investing cash flows.

And CPAexcel didn't think it would be a good idea to point this out =P

FAR - [10/07/2013 --> 66] [07/07/2014 --> 86]
BEC - [08/31/2014 --> 86]
AUD - [11/24/2014 --> 88]
REG - [02/14/2015 --> 92]

[RandomAlt]

I'm going to bring this topic back up to the top of the thread, because I want to thank NYCaccountant. I was literally just about to post the above Q to the FAR forum, but I decided to google it first. The only hit was in the another71 forums.

Thanks for the details above NYCaccountant. I totally missed that equipment and note payable accounts were investing cash flows.

And CPAexcel didn't think it would be a good idea to point this out =P

FAR - [10/07/2013 --> 66] [07/07/2014 --> 86]
BEC - [08/31/2014 --> 86]
AUD - [11/24/2014 --> 88]
REG - [02/14/2015 --> 92]

[Author]

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