(a)
Introduction:
The direct method helps us to record cash flows from operating activities. Cash flows arise from collections from the customers and cash payments to suppliers, employees and others. The direct method also reports
To prepare:
Cash flows from operating activities under direct method.
(b)
Introduction:
The direct method helps us to record cash flows from operating activities. Cash flows arise from collections from the customers and cash payments to suppliers, employees and others. The direct method also reports cash outflows for income tax and interest paid.
To state:
The change that will arise in the value of cash flow from operations if there is change in salary expenses.
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Loose-leaf For Managerial Accounting
- Use the following information from Birch Companys balance sheets to determine net cash flows from operating activities (indirect method), assuming net income for 2018 of $122,000.arrow_forwardWhich item is added to net income when computing cash flows from operating activities? a. Gain on the disposal of property, plant, and equipment b. Increase in wages payable c. Increase in inventory d. Increase in prepaid rent Use the following information for Multiple-Choice Questions 11-9 and 11-10: Cornett Company reported the following information: cash received from the issuance of common stock, $150,000; cash received from the sale of equipment, $14,800; cash paid to purchase an investment, $20,000; cash paid to retire a note payable, $50,000; and cash collected from sales to customers, $225,000.arrow_forward
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