No handwriting please Answer all questions. Requirements1. Answer the following questions for the directors:D. True or false, the financing activities section of the statement of cash flowsreflects the cash flows that affect current assets and liabilities?E. True or false, buying property, plant and equipment would be considered acash outflow from financing?F. True or false, the financing section of the statement of cash flows reflectstransactions in the equity accounts and the long-term liability accounts? Auga Company LtdComparative Balance SheetDecember 31, 2021 and 202020212020 Increase/(Decrease)AssetsCash15,000175,000230,000Accounts Receivable220,000310,00030,000105,000Inventories340,00010,000Prepaid expensesIntangible assetsEquipment, netTotal Assets105,000?830,0001.520,000860,000?1,710,000LiabilitiesAccounts payableAccrued liabilitiesIncome tax payableLong-term notes payableStockholders' EquityCommon StockRetained earningsTreasury stockTotal liabilities and stockholders' equity 1,710,00090,000140,000190,000120,000360,000160,000140,000?Scenario:450,000400,000250,000?The 2021 comparative balance sheet and income statement of Auga CompanyLtd, have just been distributed at a meeting of the company's board of directors.The members of the board of directors were desirous of knowing the reason orreasons why the cash balance different from the net income. The company usesthe indirect method to prepare the statement of cash flows and it is expected thatthis should be able to provide the needed clarity required by the directors.The directors have asked each student from your accounting course to assistwith the needed clarification and have put forward the following financialinformation grouped according to your first name initial.640,000400,000(90,000)(20,0001,520,000Auga Company LtdIncome StatementYear Ended December 31,2021Revenues and gains:Sales revenueGain on sale of plant assets 20,000Total revenues and gainsExpensesCost of goods soldDepreciation expenseOther operating expenseTotal expensesIncome before income taxesIncome tax expenseNet Income1,900,0001,920,000850,000190,000360,0001,400.000520,000180,000340,000NotesAcquisition of plant asset during 2021320,000Sale proceeds from sale of plant assetReceipt for issuance of notes payablePayment for note payableDividend paid120,00010,000100,000100,000100,000Book value of equipment sold

Cash flow statement determines the total cash inflows and outflows occurred to a business during a…

1. Answer the following questions for the directors: D. True or false, the financing activities section of the statement of cash flows reflects the cash flows that affect current assets and liabilities? E. True or false, buying property, plant and equipment would be considered a cash outflow from financing? F. True or false, the financing section of the statement of cash flows reflects transactions in the equity accounts and the long-term liability accounts?

1. Answer the following questions for the directors: D. True or false, the financing activities section of the statement of cash flows reflects the cash flows that affect current assets and liabilities? E. True or false, buying property, plant and equipment would be considered a cash outflow from financing? F. True or false, the financing section of the statement of cash flows reflects transactions in the equity accounts and the long-term liability accounts?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 98.3C

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