(1)
Introduction:
Cash flow from operating activities calculates the inflow and outflow of cash from day-to-day activities. It includes operating income and operating expenses for the year.
To prepare:
Cash flow from operating activities section using indirect method.
(2)
Introduction:
Cash flow from operating activities calculates the inflow and outflow of cash from day-to-day activities. It includes operating income and operating expenses for the year.
To state:
Even after incurring net loss why company reported a positive cash flow from operations.
(3)
Introduction:
Cash flow from operating activities calculates the inflow and outflow of cash from day-to-day activities. It includes operating income and operating expenses for the year.
To state:
Which information provided in the cash flow from operating activities is the most useful to the investors.
Want to see the full answer?
Check out a sample textbook solutionChapter 12 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
- During the year, Hepworth Company earned a net income of 61,725. Beginning and ending balances for the year for selected accounts are as follows: There were no financing or investing activities for the year. The above balances reflect all of the adjustments needed to adjust net income to operating cash flows. Required: 1. Prepare a schedule of operating cash flows using the indirect method. 2. Suppose that all the data are used in Requirement 1 except that the ending accounts payable and cash balances are not known. Assume also that you know that the operating cash flow for the year was 20,475. What is the ending balance of accounts payable? 3. CONCEPTUAL CONNECTION Hepworth has an opportunity to buy some equipment that will significantly increase productivity. The equipment costs 25,000. Assuming exactly the same data used for Requirement 1, can Hepworth buy the equipment using this years operating cash flows? If not, what would you suggest be done?arrow_forwardWhy is using the direct method to prepare the operating section of the statement of cash flows more challenging for accountants than preparing the balance sheet, income statement, and retained earnings statement?arrow_forwardIn which section of the statement of cash flows would each of the following transactions be included? For each, identify the appropriate section of the statement of cash flows as operating (O), investing (I), financing (F), or none (N). (Note: some transactions might involve two sections.) A. collected accounts receivable from customers B. issued common stock for cash C. declared and paid dividends D. paid accounts payable balance E. sold a long-term asset for the same amount as purchasedarrow_forward
- Which of the following should be added to net income in calculating net cash flow from operating activities using the INDIRECT method? A. A decrease in accounts payable. B. A decrease in accounts receivable. C. Preferred dividends declared and paid. D. An increase in inventory.arrow_forwardWhich of the following types of information is not provided by the statement of cash flows? Select one: a. Company management of current assets and liabilities b. Expenditures on long-term assets c. Current profitability as measured by specific revenues and expenses d. Reliance on external financingarrow_forwardWhich of the following is true of the statement of cash flows? A It covers a span of time and is dated the same as the income statement. B It shows how the profits or losses of the company were generated. C It indicates when long-term debt will mature. D It reports on the qualitative behavior of the company's performance.arrow_forward
- Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a.a decrease in accounts payable b.an increase in inventory c.preferred dividends declared and paid d.a decrease in accounts receivablearrow_forwardCash flows are grouped in the statement of cash flows into the following major categories: Choose Cash receipts, cash disbursements, and noncash activities. ng each of the Operating activities, investing activities, and financing activities. Direct cash flows and indirect cash flows. Operating activities, investing activities, and collecting account for each supplier (creditor)arrow_forwardWhich of the following should be deducted from net incomein calculating net cash flow from operating activities using the indirect method? Group of answer choices a loss on sale of long-term investments a increase in accounts payable a increase in accounts receivable preferred dividends declared and paidarrow_forward
- more than one answers is correct ( )Which of the following should NOT be added to net income in calculating net cash flow from operating activities using the indirect method? A an increase in inventory B a decrease in accounts payable C a decrease in accounts receivable D preferred dividends declared and paidarrow_forwardRequired:(a) Prepare Vanguard low Statement for the year ended 31 December 2019 with the following classifications using the direct method: (i) Cash flows from operations;(ii) Cash flows from investing activities;(iii) Cash flows from financing activities. (b) Discuss the importance of analysing the cash flow statement. (c) Explain why it is possible to have a negative cash flow from operations but a positive net income. Give an example of such a scenario.arrow_forwardWhich of the following statements about the statement of cash flows is correct? Group of answer choices A)Cash dividends paid are classified as cash flows from operating activities. b)Cash dividends received on stock investments are classified as cash flows from investing activities. C)A gain on the sale of equipment is classified as a cash inflow from investing activities. D)A company with a net loss on the income statement will always have a net cash outflow from operating activities. E)None of the abovearrow_forward
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning