管理会计加里森第15版答案Chap014.docx

Chapter 14Statement of Cash FlowsSolutions to Questions14-1The statement of cash flows highlights the major activities that impact cash flows and hence affect the overall cash balance.14-2Cash equivalents are short-term, highly liquid investments such as Treasury bills, commercial paper, and money market funds. They are included with cash because investments of this type are made solely for the purpose of generating a return on temporarily idle funds and they can be easily converted to cash.14-3(1) Operating activities: Include cash inflows and outflows related to revenue and expense transactions that affect net income.(2) Investing activities: Include cash inflows and outflows related to acquiring or disposing of noncurrent assets.(3) Financing activities: Include cash inflows and outflows related to borrowing from and repaying principal to creditors and completing transactions with the company’s owners.14-4The company’s specific circumstances should be considered when interpreting the statement of cash flows. The relationships among numbers should also be considered rather than evaluating each number in isolation.14-5Since the entire cash proceeds from the sale of anoncurrent asset appear as a cash inflow from investing activities, the gain must be deducted from net income to avoid double counting a portion of those proceeds.14-6Transactions involving accounts payable are not considered to be financing activities because such transactions relate to a company’s day-to-day operating activities rather than to its financing activities.14-7The repayment of $300,000 and the borrowing of $500,000 must both be shown “gross” on the statement of cash flows. That is, the company would show $500,000 of cash provided by financing activities and then show $300,000 of cash used by financing activities.14-8The direct method reconstructs the income statement on a cash basis by restating revenues and expenses in terms of cash inflows and outflows. The indirect method starts with ne