When preparing the operating section of the statement of cash flows. using the indirect method determine if the item would cause a positive adjustment to net income or a negative adjustment to net income A. increase in accounts payable B. increase in accounts receivable A. increase B. decrease B. gains from the sale of machinery A. depreciation expense

When preparing the operating section of the statement of cash flows. using the indirect method determine if the item would cause a positive adjustment to net income or a negative adjustment to net income A. increase in accounts payable B. increase in accounts receivable A. increase B. decrease B. gains from the sale of machinery A. depreciation expense

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter7: Receivables And Investments

Section: Chapter Questions

Problem 7.16E

See similar textbooks

Similar questions

In computing the periods net operating cash flows, why are noncash expenses added back to net income?
When preparing the operating section of the statement of cash flows, using the indirect method, how must gains and losses be handled? Why?
What adjustment(s) should be made to reconcile net income to net cash flows from operating activities (indirect method) considering the following balances in current assets?
Classification of Cash Flows The following are several items that might be disclosed on a companys statement of cash flows presented using the indirect method. a. Net income b. Depreciation expense c. Issuance of common stock d. Loss on disposal of equipment e. Purchase of a building f. Decrease in accounts payable g. Converted bonds into common stock h. Sale of long-term investment i. Payment of interest j. Increase in inventory Required: 1. Indicate whether each item should be classified as a cash flow from operating activities, cash flow from investing activities, cash flow from financing activities, or noncash investing and financing activity. 2. CONCEPTUAL CONNECTION Why is the proper classification of cash flows important?
In which section of the statement of cash flows would each of the following transactions be included? For each, identify the appropriate section of the statement of cash flows as operating (O), investing (I), financing (F), or none (N). (Note: some transactions might involve two sections.) A. collected accounts receivable from customers B. issued common stock for cash C. declared and paid dividends D. paid accounts payable balance E. sold a long-term asset for the same amount as purchased
Reporting Net Cash Flow from Operating Activities The following information is available for Cornelius Inc: Required: 1. Compute the net cash flows from operating activities using the indirect method. 2. CONCEPTUAL CONNECTION Explain why Cornelius was able to report net cash flow from operating activities that was higher than net income. 3. CONCEPTUAL CONNECTION What could the difference between net income and cash flow from operating activities signal to financial statement users?
Which of the following represents a source of cash in the investing section? A. sale of investments B. depreciation expense C. decrease in accounts receivable D. decrease in bonds payable
Why is depreciation an addition in the operating section of the statement of cash flows, when prepared by the indirect method?
Classification of Cash Flows Patel Company reported the following items in its statement of cash flows presented using the indirect method. a. Issuance of common stock b. Cash paid for interest c. Sold equipment for cash d. Receipt of cash dividend on investment e. Repayment of principal on long-term debt f. Loss on disposal of equipment. Required: Indicate whether each item should be classified as a cash flow from operating activities, a cash flow from investing activities, a cash flow from financing activities. Use the following information for Cornerstone Exercises 11-16 and 11-17: A review of the balance sheet of Peterson Inc. revealed the following changes in the account balances: a. Increase in long-term investment b Increase in accounts receivable c. Increase in common stock d. Increase in long-term debt e. Decrease in accounts payable f. Decrease in supplies inventory g. Increase in prepaid insurance h. Decrease in retained earnings