Statement of
Cash flows from operating activities: Cash flows from operating activity represent the net cash flows from the general operation of the business by comparing the cash receipt and cash payments.
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.
The below table shows the way of calculation of cash flows from operating activities:
Cash flows from operating activities (Indirect method) |
Add: Decrease in current assets |
Increase in current liability |
|
Loss on sale of plant assets |
Deduct: Increase in current assets |
Decrease in current liabilities |
Gain on sale of plant assets |
Net cash provided from or used by operating activities |
To Compute: Cash flows from operating activities under indirect method.
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Horngren's Financial & Managerial Accounting (5th Edition)
- Mahoney Company has the following financial statements for 2017 and 2018. Assume that the purchase of equipment and the withdrawals were in the form of cash. Required Prepare a statement of cash flows for the year ended December 31, 2018. Check Figure Net cash flows from operating activities, 76,800arrow_forwardThe financial statements for Romeo and Company follow. Assume that the additional investment and the withdrawals were in the form of cash. Required Prepare a statement of cash flows for the year ended December 31, 2018. Check Figure Net cash flows from operating activities, 172,000arrow_forward
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