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Selected data derived from the income statement and balance sheet of National Beverage Co. for a recent year are as follows: a. Prepare the Cash flows from operating activities section of the statement of cash flows, using the indirect method for National Beverage Co. b. Interpret your results in part (a).

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 16, Problem 16E
Textbook Problem
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Selected data derived from the income statement and balance sheet of National Beverage Co. for a recent year are as follows:

Chapter 16, Problem 16E, Selected data derived from the income statement and balance sheet of National Beverage Co. for a , example  1

  1.        a.            Prepare the Cash flows from operating activities section of the statement of cash flows, using the indirect method for National Beverage Co.
  2.       b.            Chapter 16, Problem 16E, Selected data derived from the income statement and balance sheet of National Beverage Co. for a , example  2 Interpret your results in part (a).

a.

To determine

Prepare cash flows from operating activities sections of the statement of cash flows using indirect method.

Explanation of Solution

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.

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
         Depreciation expense and amortization expense
         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

Table (1)

Prepare cash flows from operating activities sections of the statement of cash flows using indirect method...

b.

To determine

Interpret the result in part a.

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Chapter 16 Solutions

Financial Accounting
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