Operating activities: The items that are directly linked with the transactions that affect the net income of the company are termed as operating activities.
Direct method: It reports cash receipts and disbursements arising out of operating activities. Difference between these amounts helps us arrive at the net cash flows from operating activities.
To prepare: To prepare statement of cash flow (Direct method).
Given Information: Comparative Balance sheet as on December 31, 2017 & 2016.
Particulars |
2017 ($) |
2016 ($) |
Cash |
1,800 |
1,150 |
Receivables |
1,750 |
1,300 |
Inventory |
1,600 |
1,900 |
Plant Assets |
1,900 |
1,700 |
(1,200) |
(1,170) |
|
Long-term investments (held-to-maturity) |
1,300 |
1,420 |
Total Assets |
7,150 |
6,300 |
|
|
|
Accounts payable |
1,200 |
900 |
Accrued Liabilities |
200 |
250 |
Bonds payable |
1,400 |
1,550 |
Capital Stock |
1,900 |
1700 |
2,450 |
1900 |
|
Total Liabilities & Stockholders’ Equity |
7,150 |
6,300 |
Income statement has been provided in the question.
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