(a)
Cash Flow Statement:
Cash Flow Statement is a fundamental financial statement that renders valuable information regarding the
The cash flow statement also provides information regarding the net cash change that occurred during a period, classifying the activities into three categories those are cash from operating activities, investing, and financing activities.
In operating activities, cash affected transactions only recorded. In investing activities, investing transactions are recorded and in financial activities involve cash flows result from changes in long-term liabilities and shareholder’s equity.
To calculate: The
(b)
To explain: The reason why free cash flow often provides better information than “Net cash provided by operating activities.”
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Managerial Accounting: Tools for Business Decision Making
- In the current year, Harrisburg Corporation had net income of 35,000, a 9,000 decrease in accounts receivable, a 7,000 increase in inventory, an 8,000 increase in salaries payable, a 13,000 decrease in accounts payable, and 10,000 in depreciation expense. Using the indirect method, prepare the operating activities section of its statement of cash flows based on this information.arrow_forwardUse 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_forwardUse the following excerpts from Indigo Companys balance sheets to determine net cash flows from operating activities (indirect method), assuming net income for 2018 of $225,000.arrow_forward
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