Statement of
Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.
Cash flows from operating activities:
These refer to the cash received or cash paid in day-to-day operating activities of a company.
Direct method: This method uses the basis of cash for preparing the cash flows of statement.
Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.
- Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.
- Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.
Cash flow from investing activities:
This section of cash flows statement provides information concerning about the purchase and sale of capital assets by the company.
Cash flow from financing activities:
This section of cash flows statement provides information about the
To prepare: The cash flow statement of Incorporation P for the year ended December 31, 2018.
Want to see the full answer?
Check out a sample textbook solutionChapter 11 Solutions
Financial Accounting - Access
- Refer to the information for Cornett Company above. What amount should Cornett report on its statement of cash flows as net cash flows provided by investing activities? a. $(5,200) b. $55,200 c. $144,800 d. None of thesearrow_forwardIf a gain of $8,187 is realized in selling (for cash) office equipment having a book value of $57,511, find the total amount reported in the cash flows from investing activities section of the statement of cash flows. Select the correct answer. $49,324 $57,511 $65,698 $8,187arrow_forwardUnder the indirect method, how much should be reported as cash flows from operating activities? a. P 780,000b. P 550,000c. P 600,000d. P 750,000arrow_forward
- Under IAS7 operating cash flows can be shown using either the Direct Method or Indirect Method. Distinguish between the Direct Method and the Indirect Method indicating the advantages and disadvantages of both methods. What are the main headings under which Cash Flow Statements are presented according to IAS 7.arrow_forward1. Novak Corporation is preparing its 2020 statement of cash flows, using the indirect method. Presented below is a list of items that may affect the statement. Using the code below, indicate how each item will affect Novak’s 2020 statement of cash flows. Code Letter Effect A Added to net income in the operating section D Deducted from net income in the operating section R-I Cash receipt in investing section P-I Cash payment in investing section R-F Cash receipt in financing section P-F Cash payment in financing section N Noncash investing and financing activity (a) Purchase of land and building. select a code letter (b) Decrease in accounts receivable. select a code letter (c) Issuance of stock. select a code letter…arrow_forwardPortions of the financial statements for Peach Computer are provided below.Required: Prepare the operating activities section of the statement of cash flows for Peach Computer using the indirect method.arrow_forward
- If a gain of $8,520 is realized in selling (for cash) office equipment having a book value of $52,917, the total amount reported in the Cash flows from investing activities section of the statement of cash flows is a.$52,917 b.$44,397 c.$61,437 d.$8,520arrow_forwardIndicate for each of the following what should be disclosed on a statement of cash flows (SCF) (indirect method). If not disclosed, select "Not shown." If an item is a noncash transaction that should be shown separately, select "noncash." If an item is added to net income, select "Add," and if an item is deducted from net income, select "Deduct." Show financing and investing outflows in parentheses. For example, an answer might be: Deduct $4,700 or Investing ($31,000). There is more than one answer for some items. Statement of Cash Flows (Indirect Method) Disclosure Effect on Net Income Effect on Cash Flows (a) For 2021, income before an extraordinary loss was $402,500. A tornado damaged a building and its contents. The proceeds from insurance companies totaled $118,500, which was $50,500 less than the book values. The tax rate was 30%.…arrow_forwardIf a gain of $8,652 is realized in selling (for cash) office equipment having a book value of $50,620, the total amount reported in the investing activities section of the statement of cash flows is a.$41,968 b.$59,272 c.$8,652 d.$50,620arrow_forward
- (47) The FASB and IASB prefer the direct method of reporting operating cash flows on the statement of cash flows. True Falsearrow_forwardPreparing Net Cash Flows from Operating Activities-Direct Method Colassard Industries has the following data available for preparation of its statement of cash flows: Required: Prepare the cash flows from operating activities section of the statement of cash flows using the direct method.arrow_forwardPreparing a Statement of Cash Flows Monon Cable Television Company reported the following financial statements for 20l9: Required: 1. Prepare a statement of cash flows using the indirect method to compute net cash flow from operating activities. 2. CONCEPTUAL CONNECTION Explain what has been responsible for the decrease in cash.arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:CengageFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning