6. Business activities are classified into operating, investing and funding activities in the SCF. 7. Salary and utility payments are reported as operating activities. 8. Noncash expenses such as depreciation and amortization are deducted from the net income to arrive at the cash flows from operating activities. 9. A negative cash flow from investing activities is bad indicator of the company's ability to generate cash.
6. Business activities are classified into operating, investing and funding activities in the SCF. 7. Salary and utility payments are reported as operating activities. 8. Noncash expenses such as depreciation and amortization are deducted from the net income to arrive at the cash flows from operating activities. 9. A negative cash flow from investing activities is bad indicator of the company's ability to generate cash.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Answer true or false 7-10.
Transcribed Image Text:TRUE OR FALSE: Read each sentence carefully and determine whether the statement is
True or False. Write your answers in the space provided before the number.
1. The Statement of Cash Flows shows the amount of cash received and used in
the business organized according to operating, investing, and financing
activities.
2. Cash payment for bank loan are reported under cash flows from operating
activities.
3. If the company has no accounts receivable balance at the beginning and at the
end of the year, then net sales reported in the Statement of Comprehensive
Income will most likely be equal to the cash received from customers reported in
the SCF.
4. Payments for acquisition of a merchandise inventory are reported as investing
activities.
5. Statement of Cash Flows explains the observed difference in the cash balance
from the beginning to the end of the period.
6. Business activities are classified into operating, investing and funding activities
in the SCF.
7. Salary and utility payments are reported as operating activities.
8. Noncash expenses such as depreciation and amortization are deducted from the
net income to arrive at the cash flows from operating activities.
9. A negative cash flow from investing activities is bad indicator of the company's
ability to generate cash.
10. The bottom line of the Statement of Cash Flow is equivalent to the cash balance
presented in the SFP.
COMPREHENSIVE PROBLEM
Juana's sari-sari store had the following transactions during the year:
a. Purchase of goods. Paid cash. 100,000
b. Sale of goods. Received cash. 150,000
c. Paid utilities 30,000
d. Paid rent 10,000
e. Sold equipment for cash 100,000
f. Owner withdraws investment 10,000
1.
Compute for the net cash flow generated by/used in operating activities
2.
Using the given above, compute for the net cash flow generated by/used in investing
activities.
Using the given above, compute for the net cash flow generated by/used in financing
activities.
3.
4.
Using the given above, prepare a Cash Flow Statement using direct method.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education