(a) Non- cash transactions The transaction which does not involve any cash dealings is known as non-cash transactions. In these type transactions there will not be any inflow or outflow of cash. Simply put, the transaction which does not have an impact on the inflow or outflow of cash is called as non-cash transactions. To Prepare: Statement of cash flows of S Company using indirect method.

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Answer 1

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Chapter 12, Problem 12.7EYCT

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: 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.

Deduct the amount of cash used to purchase any fixed assets.
Add the amount of cash received from sale of any fixed asset.

Cash flow from financing activities: This section of cash flows statement provides information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.

Add the amount of cash received from any sources of finance.
Deduct the amount of cash used for payment for dividend and interest from financing activities.
Deduct the amount of cash used for payment of treasury stock from financing activities.

To determine

(a)

Non- cash transactions

The transaction which does not involve any cash dealings is known as non-cash transactions. In these type transactions there will not be any inflow or outflow of cash. Simply put, the transaction which does not have an impact on the inflow or outflow of cash is called as non-cash transactions.

To Prepare: Statement of cash flows of S Company using indirect method.

(b)

To determine

To analyze: the statement made by M and P with reference to the statement of cash flow.

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Answer 2

Question

Chapter 12, Problem 12.7EYCT

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: 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.

Deduct the amount of cash used to purchase any fixed assets.
Add the amount of cash received from sale of any fixed asset.

Cash flow from financing activities: This section of cash flows statement provides information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.

Add the amount of cash received from any sources of finance.
Deduct the amount of cash used for payment for dividend and interest from financing activities.
Deduct the amount of cash used for payment of treasury stock from financing activities.

To determine

(a)

Non- cash transactions

The transaction which does not involve any cash dealings is known as non-cash transactions. In these type transactions there will not be any inflow or outflow of cash. Simply put, the transaction which does not have an impact on the inflow or outflow of cash is called as non-cash transactions.

To Prepare: Statement of cash flows of S Company using indirect method.

(b)

To determine

To analyze: the statement made by M and P with reference to the statement of cash flow.

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Answer 3

Question

Chapter 12, Problem 12.7EYCT

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: 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.

Deduct the amount of cash used to purchase any fixed assets.
Add the amount of cash received from sale of any fixed asset.

Cash flow from financing activities: This section of cash flows statement provides information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.

Add the amount of cash received from any sources of finance.
Deduct the amount of cash used for payment for dividend and interest from financing activities.
Deduct the amount of cash used for payment of treasury stock from financing activities.

To determine

(a)

Non- cash transactions

The transaction which does not involve any cash dealings is known as non-cash transactions. In these type transactions there will not be any inflow or outflow of cash. Simply put, the transaction which does not have an impact on the inflow or outflow of cash is called as non-cash transactions.

To Prepare: Statement of cash flows of S Company using indirect method.

(b)

To determine

To analyze: the statement made by M and P with reference to the statement of cash flow.

Expert Solution & Answer

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Answer 4

Question

Chapter 12, Problem 12.7EYCT

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: 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.

Deduct the amount of cash used to purchase any fixed assets.
Add the amount of cash received from sale of any fixed asset.

Cash flow from financing activities: This section of cash flows statement provides information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.

Add the amount of cash received from any sources of finance.
Deduct the amount of cash used for payment for dividend and interest from financing activities.
Deduct the amount of cash used for payment of treasury stock from financing activities.

To determine

(a)

Non- cash transactions

The transaction which does not involve any cash dealings is known as non-cash transactions. In these type transactions there will not be any inflow or outflow of cash. Simply put, the transaction which does not have an impact on the inflow or outflow of cash is called as non-cash transactions.

To Prepare: Statement of cash flows of S Company using indirect method.

(b)

To determine

To analyze: the statement made by M and P with reference to the statement of cash flow.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 12, Problem 12.7EYCT

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: 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.

Deduct the amount of cash used to purchase any fixed assets.
Add the amount of cash received from sale of any fixed asset.

Cash flow from financing activities: This section of cash flows statement provides information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.

Add the amount of cash received from any sources of finance.
Deduct the amount of cash used for payment for dividend and interest from financing activities.
Deduct the amount of cash used for payment of treasury stock from financing activities.

To determine

(a)

Non- cash transactions

The transaction which does not involve any cash dealings is known as non-cash transactions. In these type transactions there will not be any inflow or outflow of cash. Simply put, the transaction which does not have an impact on the inflow or outflow of cash is called as non-cash transactions.

To Prepare: Statement of cash flows of S Company using indirect method.

(b)

To determine

To analyze: the statement made by M and P with reference to the statement of cash flow.

Answer 6

Chapter 12, Problem 12.7EYCT

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: 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.

Deduct the amount of cash used to purchase any fixed assets.
Add the amount of cash received from sale of any fixed asset.

Cash flow from financing activities: This section of cash flows statement provides information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.

Add the amount of cash received from any sources of finance.
Deduct the amount of cash used for payment for dividend and interest from financing activities.
Deduct the amount of cash used for payment of treasury stock from financing activities.

To determine

(a)

Non- cash transactions

The transaction which does not involve any cash dealings is known as non-cash transactions. In these type transactions there will not be any inflow or outflow of cash. Simply put, the transaction which does not have an impact on the inflow or outflow of cash is called as non-cash transactions.

To Prepare: Statement of cash flows of S Company using indirect method.

Answer 7

Chapter 12, Problem 12.7EYCT

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: 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.

Deduct the amount of cash used to purchase any fixed assets.
Add the amount of cash received from sale of any fixed asset.

Cash flow from financing activities: This section of cash flows statement provides information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.

Add the amount of cash received from any sources of finance.
Deduct the amount of cash used for payment for dividend and interest from financing activities.
Deduct the amount of cash used for payment of treasury stock from financing activities.

To determine

(a)

Non- cash transactions

The transaction which does not involve any cash dealings is known as non-cash transactions. In these type transactions there will not be any inflow or outflow of cash. Simply put, the transaction which does not have an impact on the inflow or outflow of cash is called as non-cash transactions.

To Prepare: Statement of cash flows of S Company using indirect method.

Answer 8

(b)

To determine

To analyze: the statement made by M and P with reference to the statement of cash flow.

Answer 9

(b)

To determine

To analyze: the statement made by M and P with reference to the statement of cash flow.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 12 - Prob. 1Q Ch. 12 - Prob. 2Q Ch. 12 - Prob. 3Q Ch. 12 - Prob. 4Q Ch. 12 - Prob. 5Q Ch. 12 - Prob. 6Q Ch. 12 - Why is it necessary to use comparative balance...Ch. 12 - Prob. 8Q Ch. 12 - Prob. 9Q Ch. 12 - Prob. 10Q

Solution Summary: The author explains how to prepare a statement of cash flows using the indirect method.

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To analyze: the statement made by M and P with reference to the statement of cash flow.

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