Explanation Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing 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 . Cash flows from operating activities: These are the cash produced by the normal business operations. Y Incorporation Statement of Cash Flows – Indirect Method For the Year Ended December 31, 20Y8 Details Amount ($) Amount ($) Cash flows from operating activities: Net income 250,000 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation expense 135,000 Changes in current operating assets and liabilities: Decrease in accounts receivable 20,000 Increase in inventories (70,000) Increase in prepaid expense (10,000) Increase in accounts payable 25,000 100,000 Net cash provided by operating activities $350,000 Cash flows from investing activities: Cash used for purchase of equipment (420,000) Net cash used for investing activities ($420,000) Cash flows from financing activities: Cash received from sale of common s...

Financial and Managerial Accounting - CengageNow

15th Edition

ISBN: 9781337911979

Author: WARREN

Publisher: CENGAGE L

See similar textbooks

Question

100%

Chapter 13, Problem 2PA

To determine

Prepare a statement of cash flows using the indirect method for presenting cash flows from operating activities.

Expert Solution & Answer

Chapter 13 Solutions

Financial and Managerial Accounting - CengageNow

Ch. 13 - What is the principal disadvantage of the direct...Ch. 13 - Prob. 2DQ Ch. 13 - A corporation issued 2,000,000 of common stock in...Ch. 13 - A retail business, using the accrual method of...Ch. 13 - Prob. 5DQ Ch. 13 - A long-term investment in bonds with a cost of...Ch. 13 - A corporation issued 2,000,000 of 20-year bonds...Ch. 13 - Fully depreciated equipment costing 50,000 was...Ch. 13 - Prob. 9DQ Ch. 13 - Name five common major classes of operating cash...

Knowledge Booster

Recommended textbooks for you

FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education