The 2021 comparative balance sheet and income statement of Auga Company Ltd, 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 or reasons why the cash balance different from the net income. The company uses the indirect method to prepare the statement of cash flows and it is expected that this should be able to provide the needed clarity required by the directors. The directors have asked each student from your accounting course to assist with the needed clarification and have put forward the following financial information grouped according to your first name initial. Requirements
Scenario:
The 2021 comparative balance sheet and income statement of Auga Company Ltd, 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 or reasons why the cash balance different from the net income. The company uses the indirect method to prepare the statement of cash flows and it is expected that this should be able to provide the needed clarity required by the directors.
The directors have asked each student from your accounting course to assist with the needed clarification and have put forward the following financial information grouped according to your first name initial.
Requirements
1. 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?
b) True or false, investors and management use the statement of cash flows to evaluate a firm's profitability?
c) True or false, the financing activities section of the statement of cash flows includes paying dividends and paying off loans?
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
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?
g)True or false, suppose Auga Company Ltd just started business and was looking for additional capital in order to purchase a property to build their headquarters. If they found an investor who was willing to sell them land worth $500,000 in exchange for stock in the company, would this transaction be shown in the investing activities section of the statement of cash flows?
2) Reconstruct the company’s comparative balance sheet for 2020/2021 using the information in line with your first name initial and compute and show the missing figures to include the appropriate sign as a positive or negative figure.
3) Prepare a complete statement of cash flows for 2021 using the indirect method using the information in line with your first name initial.
*Please assist me with correctly answering all the above questions and to complete the inform in the images provided*
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