### Financial Accounting: Moneyman, Inc. Case Study**Objective:**To analyze the net income and cash flow from operating activities of Moneyman, Inc. for the current year.**Background:**Moneyman, Inc. reported a net income of $63,000 on its income statement for the current year. Depreciation recorded on fixed assets for the year was $24,000. Below are the balances of the current asset and liability accounts of Moneyman at the beginning and end of the year.**Account Balances:**| Account | End | Beginning ||----------------------------------------|---------|-----------|| Cash | $65,000 | $70,000 || Accounts Receivable | $70,000 | $57,000 || Inventories | $86,000 | $102,000 || Prepaid Expenses | $4,000 | $4,500 || Accounts Payable (merchandise creditors)| $51,000 | $58,000 || Cash Dividends Payable | $4,500 | $6,500 || Salaries Payable | $6,000 | $7,500 |**Tasks Required:**a. **Prepare the Cash Flows from Operating Activities:** Using the indirect method, prepare the cash flows from operating activities section of the statement of cash flows. This involves adjusting the net income for changes in asset and liability accounts and non-cash expenses such as depreciation and amortization.b. **Explain Net Cash Flow Variance:** Provide a brief explanation of why the net cash flow from operating activities is different from net income. Consider factors such as non-cash expenses, changes in working capital, and other adjustments which can cause discrepancies between reported net income and actual cash flow. This case study helps students explore the dynamics of cash flow and its relation to net income, highlighting the importance of understanding cash flow in financial analysis.

Cash Flow Statement - The Cash Flow Statement is the statement that shows the cash inflow and…

1. Moneyman, Inc. reported $63,000 net income on its income statement for the current year. Depreciation recorded on fixed assets for the year was $24,000. Below are the balances of the current asset and liability accounts of Moneyman at the beginning and end of the year. Cash Accounts Receivable Inventories Prepaid Expenses Accounts Payable (merchandize creditors) Cash Dividends Payable Salaries Payable Required: End $65,000 $70,000 $86,000 $ 4,000 $51,000 $ 4,500 $ 6,000 Beginning $70,000 $57,000 $102,000 $ 4,500 $58,000 $ 6,500 $7,500 a. Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. b. Briefly explain why net cash flow from operating activities is different from net income.

1. Moneyman, Inc. reported $63,000 net income on its income statement for the current year. Depreciation recorded on fixed assets for the year was $24,000. Below are the balances of the current asset and liability accounts of Moneyman at the beginning and end of the year. Cash Accounts Receivable Inventories Prepaid Expenses Accounts Payable (merchandize creditors) Cash Dividends Payable Salaries Payable Required: End $65,000 $70,000 $86,000 $ 4,000 $51,000 $ 4,500 $ 6,000 Beginning $70,000 $57,000 $102,000 $ 4,500 $58,000 $ 6,500 $7,500 a. Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. b. Briefly explain why net cash flow from operating activities is different from net income.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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