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Statement of
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 |
To Describe: The five steps used to prepare the statement of cash flows by the indirect method.
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Chapter 14 Solutions
Horngren's Financial & Managerial Accounting, The Managerial Chapters, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (6th Edition)
- EXPLAIN FOUR ITEMS COVERED UNDER FINANCING ACTIVITIES IN THE STATEMENT OF CASH FLOWS?arrow_forwardA worksheet for the statement of cash flows consists of two sections: A. cash effects and non-cash effects B. cash effects and net income C. balance sheet effects and non-cash effects D. balance sheet effects and cash effectsarrow_forwardBriefly state the purposes of a statement of cash flows.arrow_forward
- What are the three major types of activities classified on a statement of cash flows? Give an example of a cash inflow and a cash outflow in each classification.arrow_forwarddescribe on of the three activites reported on the statement of cash flowarrow_forwardWhat are the three major sections on a statement of cash flows, and what are the general rulesthat determine the transactions that should be included in each section?arrow_forward
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
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