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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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Reporting Net Cash Flow from Operating Activities

The following information is available for Cornelius Inc:

Chapter 11, Problem 39E, Reporting Net Cash Flow from Operating Activities The following information is available for

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?

To determine

(a)

Introduction:

Money from working exercises typically alludes to the principal segment of the announcement of money streams. Money from working exercises centers around the money inflows and surges from an organization’s fundamental business exercises of purchasing and selling stock, giving administrations, and so.

To compute:

Compute the net cash flow from operating activities using the indirect method.

Explanation
Particular Amount ($)
Net income as per income statement
Add: Depreciation
Operating profit before working capital...
To determine

(b)

Introduction:

The income statement is prepared on the accrual basis. In the income statement, only those expense and income is to consider which is related to the current year only. The pay articulation reports incomes, costs, and the subsequent net gain. It is set up by exchanging the accompanying record account adjusts, considering any modifying sections that have been or will be made: Revenue. Costs.

Cash flow statement is to prepare how much cash inflow or outflow from the business. Cash flow statement is no flow the accrual basis.

To discuss:

Explain why Cornelius was able to report net cash flow from operating activities was higher than net income.

To determine

(c)

Introduction:

The income statement is prepared on the accrual basis. In the income statement, only those expense and income is to consider which is related to the current year only. The pay articulation reports incomes, costs, and the subsequent net gain. It is set up by exchanging the accompanying record account adjusts, considering any modifying sections that have been or will be made: Revenue. Costs.

Cash flow statement is to prepare how much cash inflow or outflow from the business. Cash flow statement is no flow the accrual basis.

To discuss:

What could the difference between net income and cash flow from operating activities signal to financial statement users?

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