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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Analyzing Changes in Balance Sheet Accounts

Refer to the information for Peterson Inc. above.

Required:

Indicate whether each of the changes above produces a cash increase, a cash decrease, or is a noncash activity.

To determine

Introduction:

Balance sheet:

An announcement of the assets, liabilities, and capital of a business or other association at a specific point in time, enumerating the parity of income and expenditure over the previous period.

Cash flow:

A cash flow statement normally breaks out an organization’s cash sources and uses for the period into three classifications: cash flow from operating activities, cash flow from investing activities, and cash flow from financing exercises.

To choose:

Indicate whether each of the changes above produces a cash increase, a cash decrease, or is a non cash activity.

Explanation

The following changes of cash increase or decrease.

Balance sheet Increase cash or decrease cash or non-cash activity
a. Increase in long-term investment Decease cash Purchase of investment its means cash outflow
b. Increase in accounts receivable Decease cash Its means sold goods for on credit basis. Its means purchase of inventory and no recovery on sale yet now.
c. Increase in common stock Increase cash Increase in stock means issue of share and cash inflow.
d. Increase in long-term debt Increase Cash Increase in long term debt means taking borrowing for more cash so, inflow of cash...

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