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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Direct and Indirect Methods Dauve Company reported the following condensed income statement for 2019:

Chapter 21, Problem 22E, Direct and Indirect Methods Dauve Company reported the following condensed income statement for , example  1

During 2019, the following changes occurred in the company’s current assets and current liabilities:

Chapter 21, Problem 22E, Direct and Indirect Methods Dauve Company reported the following condensed income statement for , example  2

Required:

  1. 1. By visual inspection, prepare the net cash flow from the operating activities section of Dauve’s 2019 statement of cash flows using the indirect method.
  2. 2. By visual inspection, prepare the net cash flow from the operating activities section of Dauve’s 2019 statement of cash flows using the direct method.

1.

To determine

Prepare the operating activities section in the cash flow statement under visual inspection using indirect method of D company for the year 2019.

Explanation

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. Statement of cash flows includes the changes in cash balance due to operating, investing, and financing activities.

Operating Activities: Operating activities include cash inflows and outflows from business operations.

Visual inspection method: Visual inspection method is a process of reviewing a company’s financial statement and prepares cash flow statement without using a spreadsheet. This method is used when the company’s financial statement is simple and the relationship between changes in accounts can be easily analyzed.

Prepare the operating activities section in the cash flow statement under visual inspection using indirect method...

2.

To determine

Prepare operating activities section in the cash flow statement under visual inspection using direct method of D company for the year 2019:

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