No handwriting please Requirements1. Answer the following questions for the directors:A. True or false, does the statement of cash flows explains the differencebetween net income and the change in the cash balance?B. True or false, investors and management use the statement of cash flowsto evaluate a firm's profitability?c. True or false, the financing activities section of the statement of cash flowsincludes paying dividends and paying off loans?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?G. True or false, suppose Auga Company Ltd just started business and waslooking for additional capital in order to purchase a property to build theirheadquarters. If they found an investor who was willing to sell them landworth $500,000 in exchange for stock in the company, would thistransaction be shown in the investing activities section of the statement ofcash flows?2. Reconstruct the company's comparative balance sheet for 2020/2021 usingthe information in line with your first name initial and compute and showthe missing figures to include the appropriate sign as a positive or negativefigure.3. Prepare a complete statement of cash flows for 2021 using the indirectmethod using the information in line with your first name initial. Auga Company LtdComparative Balance SheetDecember 31, 2021 and 202020212020 Increase/(Decrease)AssetsCash175,00015,000?Accounts Receivable230,000220,000?Inventories310,000340,00010,000?Prepaid expensesIntangible assetsEquipment, netTotal Assets30,000105,000105,000?860,0001,710,000830,0001,520,000LiabilitiesAccounts payableAccrued liabilities90,000140,000?190,000160,000?Income tax payableLong-term notes payableStockholders' Equity120,000360,000140,000450,000Common StockRetained earningsTreasury stockTotal liabilities and stockholders' equity 1,710,000 1,520,000400,000640,000(90,000)250,000400,000(20,000)Auga Company LtdIncome StatementYear Ended December 31,2021Revenues and gains:1,900,00020,000Sales revenueGain on sale of plant assetsTotal revenues and gainsExpensesCost of goods soldDepreciation expenseOther operating expenseTotal expensesIncome before income taxesIncome tax expenseNet Income1,920,000850,000190,000360,0001,400,000520,000180,000340,000Notes320,000Acquisition of plant asset during 2021Sale proceeds from sale of plant assetReceipt for issuance of notes payablePayment for note payableDividend paid120,00010,000100,000100,000Book value of equipment sold100,000

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Answered: Answer the following questions for the…

Answer the following questions for the directors: A. True or false, does the statement of cash flows explains the difference between net income and the change in the cash balance?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 53BE

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