Concept explainers
Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash and result of these transactions is reported as ending balance of cash at the end of reported period.
Operating activities: Operating activities refer to the normal activities of a company to carry out the business. The examples for operating activities are purchase of inventory, payment of salary, sales, and others.
Investing activities: Investing activities refer to the activities carried out by a company for acquisition of long term assets. The examples for investing activities are purchase of equipment, long term investment, sale of land, and others.
Financing activities: Financing activities refer to the activities carried out by a company to mobilize funds to carry out the business activities. The examples for financing activities are purchase of bonds, issuance of common shares, and others.
To Prepare: The statement of cash flows of Company R, using indirect method.
Want to see the full answer?
Check out a sample textbook solutionChapter 21 Solutions
Connect Access Card For Intermediate Accounting
- Intermediate Accounting 105 What is the purpose of a statement of cash flows? How does it differ from a balance sheet and an income statement? Please provide GAAP concept and own explanation / example.arrow_forwardIAS 7 Statement of cash flows allows entities to present cash flow from operating activities, using either indirect method or direct method. a. Explain why and how the following are adjusted when preparing the statement of cash flows following the indirect method • Depreciation/amortisation • Profit/loss on disposal • Interest receivable/investment income • Finance costs • Change in receivable • Change in inventory • Change in payables. b. The statement of cash flows is an important part of the financial statements. Outline the importance of statement of cash flowsarrow_forwardRead CA23-5 found in the end of chapter materials of Chapter 23 and answer the related questions. CA23-5. (Purpose and Elements of SCF) GAAP requires the statement of cash flows be presented when financial statements are prepared. Instructions (a) Explain the purposes of the statement of cash flows. (b) List and describe the three categories of activities that must be reported in the statement of cash flows. (c) Identify and describe the two methods that are allowed for reporting cash flows from operations. (d) Describe the financial statement presentation of noncash investing and financing transactions. Include in your description an example of a noncash investing and financing transaction.arrow_forward
- Prepare a statement of cash flows using the indirect method. unit IV question 15arrow_forward(Appendix 21.1) Operating Cash Flows Refer to the information for Lamberson Company in P21-6. Required: 1. Using the direct method, prepare the operating activities section of the 2019 statement of cash flows for Lamberson. 2. (Optional). If you completed P21-6 earlier, prepare the remaining portion of the statement of cash flows. (A separate schedule reconciling net income to cash provided by operating activities is not necessary.)arrow_forwardQUESTION 30 Statement of Cash flows requires that cash receipts and payments should be analysed into three main categories. Under which category would you expect to find the cash proceeds from a share issue? a. Financing activities •b. Operating activities c. Investing activities d.Cash and cash equivalentsarrow_forward
- What is the purpose of the statement of cash flows? One or two paragraph minimum CH 15arrow_forward1. What amount should be reported as Cash and Cash Equivalents? a. 3,548,000 b. 3,423,000 c. 3,523,000 d. 3,448,000 2. How much from the information above should be presented as part of liability? a. Zero b. 200,000 c. 2,175,000 d. 2,200,000arrow_forwardProblem 21-17 (Algo) Statement of cash flows; indirect method [LO21-4, 21-8] Comparative balance sheets for 2021 and 2020 and a statement of income for 2021 are given below for Metagrobolize Industries. Additional information from the accounting records of Metagrobolize also is provided. METAGROBOLIZE INDUSTRIESComparative Balance SheetsDecember 31, 2021 and 2020($ in thousands) 2021 2020 Assets Cash $ 405 $ 245 Accounts receivable 350 190 Inventory 500 275 Land 500 450 Building 900 900 Less: Accumulated depreciation (200 ) (180 ) Equipment 2,500 2,150 Less: Accumulated depreciation (325 ) (300 ) Patent 1,000 1,150 $ 5,630 $ 4,880 Liabilities Accounts payable $ 600 $ 400 Accrued liabilities 150 130 Lease liability—land 130 0 Shareholders' Equity Common stock…arrow_forward
- Help Save & Exit Which of the following items do we report in the statement of cash flows using the direct method? Multiple Choice 39 19 Depreciation expense. Cash paid to suppliers. Gain on sale of an asset. Loss on sale of an asset. C raw hparrow_forwardProblem 21-16 (Algo) Statement of cash flows; indirect method [LO21-4, 21-8] The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for Dux Company. Additional information from Dux’s accounting records is provided also. DUX COMPANYComparative Balance SheetsDecember 31, 2021 and 2020($ in thousands) 2021 2020 Assets Cash $ 117.0 $ 34.0 Accounts receivable 62.0 64.0 Less: Allowance for uncollectible accounts (3.0 ) (2.0 ) Dividends receivable 17.0 16.0 Inventory 69.0 64.0 Long-term investment 29.0 24.0 Land 84.0 40.0 Buildings and equipment 169.0 264.0 Less: Accumulated depreciation (7.0 ) (120.0 ) $ 537.0 $ 384.0 Liabilities Accounts payable $ 27.0 $ 34.0 Salaries payable 16.0 19.0 Interest payable 18.0 16.0 Income tax payable…arrow_forward10-Choose how “cash equivalents” are to be disclosed in the balance sheet. a. Relevant cost b. Fair value c. Historical cost d. Market pricearrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning