Statement of cash flows : 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. Indirect method of cash flow from operating activities: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities . Deduct increase in current assets Deduct decrease in current liabilities Add decrease in current assets Add the increase in current liability Add depreciation expense and amortization expense Add loss on sale of plant assets Less gain on sale of plant assets 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 the information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends. To prepare: The statement of cash flow of Company A under indirect method.

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Answer 1

Question

Chapter 11, Problem 11.5APE

Requirement – 1

To determine

Statement of cash flows:

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.

Indirect method of cash flow from operating activities: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Deduct increase in current assets

Deduct decrease in current liabilities

Add decrease in current assets

Add the increase in current liability

Add depreciation expense and amortization expense

Add loss on sale of plant assets

Less gain on sale of plant assets

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 the information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.

To prepare: The statement of cash flow of Company A under indirect method.

Requirement – 2

To determine

Cash flows from operating activities:

These refer to the cash received or cash paid in day-to-day operating activities of a company.

Net income:

Net income is the excess amount of revenue which is arises after deducting all the expenses of a company. In simply, it is the difference between total revenue and total expenses of the company.

To explain: Whether there is possibility to getting positive net income and negative net cash flow from operating activities in the same period, and also discuss the manner in which the negative cash flows affect the confidence in the reliability of the net income amount.

Requirement – 3

To determine

To discuss: The manner in which potential employment position helps to get loan, and it have any influence on the loan decision.

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Answer 2

Question

Chapter 11, Problem 11.5APE

Requirement – 1

To determine

Statement of cash flows:

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.

Indirect method of cash flow from operating activities: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Deduct increase in current assets

Deduct decrease in current liabilities

Add decrease in current assets

Add the increase in current liability

Add depreciation expense and amortization expense

Add loss on sale of plant assets

Less gain on sale of plant assets

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 the information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.

To prepare: The statement of cash flow of Company A under indirect method.

Requirement – 2

To determine

Cash flows from operating activities:

These refer to the cash received or cash paid in day-to-day operating activities of a company.

Net income:

Net income is the excess amount of revenue which is arises after deducting all the expenses of a company. In simply, it is the difference between total revenue and total expenses of the company.

To explain: Whether there is possibility to getting positive net income and negative net cash flow from operating activities in the same period, and also discuss the manner in which the negative cash flows affect the confidence in the reliability of the net income amount.

Requirement – 3

To determine

To discuss: The manner in which potential employment position helps to get loan, and it have any influence on the loan decision.

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Answer 3

Question

Chapter 11, Problem 11.5APE

Requirement – 1

To determine

Statement of cash flows:

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.

Indirect method of cash flow from operating activities: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Deduct increase in current assets

Deduct decrease in current liabilities

Add decrease in current assets

Add the increase in current liability

Add depreciation expense and amortization expense

Add loss on sale of plant assets

Less gain on sale of plant assets

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 the information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.

To prepare: The statement of cash flow of Company A under indirect method.

Requirement – 2

To determine

Cash flows from operating activities:

These refer to the cash received or cash paid in day-to-day operating activities of a company.

Net income:

Net income is the excess amount of revenue which is arises after deducting all the expenses of a company. In simply, it is the difference between total revenue and total expenses of the company.

To explain: Whether there is possibility to getting positive net income and negative net cash flow from operating activities in the same period, and also discuss the manner in which the negative cash flows affect the confidence in the reliability of the net income amount.

Requirement – 3

To determine

To discuss: The manner in which potential employment position helps to get loan, and it have any influence on the loan decision.

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Answer 4

Question

Chapter 11, Problem 11.5APE

Requirement – 1

To determine

Statement of cash flows:

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.

Indirect method of cash flow from operating activities: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Deduct increase in current assets

Deduct decrease in current liabilities

Add decrease in current assets

Add the increase in current liability

Add depreciation expense and amortization expense

Add loss on sale of plant assets

Less gain on sale of plant assets

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 the information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.

To prepare: The statement of cash flow of Company A under indirect method.

Requirement – 2

To determine

Cash flows from operating activities:

These refer to the cash received or cash paid in day-to-day operating activities of a company.

Net income:

Net income is the excess amount of revenue which is arises after deducting all the expenses of a company. In simply, it is the difference between total revenue and total expenses of the company.

To explain: Whether there is possibility to getting positive net income and negative net cash flow from operating activities in the same period, and also discuss the manner in which the negative cash flows affect the confidence in the reliability of the net income amount.

Requirement – 3

To determine

To discuss: The manner in which potential employment position helps to get loan, and it have any influence on the loan decision.

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Answer 5

Chapter 11, Problem 11.5APE

Requirement – 1

To determine

Statement of cash flows:

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.

Indirect method of cash flow from operating activities: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Deduct increase in current assets

Deduct decrease in current liabilities

Add decrease in current assets

Add the increase in current liability

Add depreciation expense and amortization expense

Add loss on sale of plant assets

Less gain on sale of plant assets

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 the information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.

To prepare: The statement of cash flow of Company A under indirect method.

Requirement – 2

To determine

Cash flows from operating activities:

These refer to the cash received or cash paid in day-to-day operating activities of a company.

Net income:

Net income is the excess amount of revenue which is arises after deducting all the expenses of a company. In simply, it is the difference between total revenue and total expenses of the company.

To explain: Whether there is possibility to getting positive net income and negative net cash flow from operating activities in the same period, and also discuss the manner in which the negative cash flows affect the confidence in the reliability of the net income amount.

Requirement – 3

To determine

To discuss: The manner in which potential employment position helps to get loan, and it have any influence on the loan decision.

Answer 6

Chapter 11, Problem 11.5APE

Requirement – 1

To determine

Statement of cash flows:

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.

Indirect method of cash flow from operating activities: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Deduct increase in current assets

Deduct decrease in current liabilities

Add decrease in current assets

Add the increase in current liability

Add depreciation expense and amortization expense

Add loss on sale of plant assets

Less gain on sale of plant assets

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 the information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.

To prepare: The statement of cash flow of Company A under indirect method.

Answer 7

Chapter 11, Problem 11.5APE

Requirement – 1

To determine

Statement of cash flows:

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.

Indirect method of cash flow from operating activities: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Deduct increase in current assets

Deduct decrease in current liabilities

Add decrease in current assets

Add the increase in current liability

Add depreciation expense and amortization expense

Add loss on sale of plant assets

Less gain on sale of plant assets

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 the information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.

To prepare: The statement of cash flow of Company A under indirect method.

Answer 8

Requirement – 2

To determine

Cash flows from operating activities:

These refer to the cash received or cash paid in day-to-day operating activities of a company.

Net income:

Net income is the excess amount of revenue which is arises after deducting all the expenses of a company. In simply, it is the difference between total revenue and total expenses of the company.

To explain: Whether there is possibility to getting positive net income and negative net cash flow from operating activities in the same period, and also discuss the manner in which the negative cash flows affect the confidence in the reliability of the net income amount.

Answer 9

Requirement – 2

To determine

Cash flows from operating activities:

These refer to the cash received or cash paid in day-to-day operating activities of a company.

Net income:

Net income is the excess amount of revenue which is arises after deducting all the expenses of a company. In simply, it is the difference between total revenue and total expenses of the company.

To explain: Whether there is possibility to getting positive net income and negative net cash flow from operating activities in the same period, and also discuss the manner in which the negative cash flows affect the confidence in the reliability of the net income amount.

Answer 10

Requirement – 3

To determine

To discuss: The manner in which potential employment position helps to get loan, and it have any influence on the loan decision.

Answer 11

Requirement – 3

To determine

To discuss: The manner in which potential employment position helps to get loan, and it have any influence on the loan decision.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 11 - 1.Identify and briefly describe the three...Ch. 11 - Prob. 2RQ Ch. 11 - Explain what we mean by noncash activities and...Ch. 11 - Why is it necessary to use an income statement,...Ch. 11 - Prob. 5RQ Ch. 11 - Prob. 6RQ Ch. 11 - Distinguish between the indirect method and the...Ch. 11 - Prob. 8RQ Ch. 11 - Prob. 9RQ Ch. 11 - 10.Explain how we report depreciation expense in...

Solution Summary: The author explains how the statement of cash flow of Company A for the year ended December 31, 2020 is prepared under indirect method.

To discuss: The manner in which potential employment position helps to get loan, and it have any influence on the loan decision.

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Chapter 11 Solutions