A. Calculate the operating section of cash flow using the direct method with the information provided on the next page B. Calculate the finanaing section of cash flow using the same information from the next page, assuming that the cash dividends were paid c. Calculate the inventory turnover ratio with the information provided
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
![Genesls Corp.
Income Statement
For Year Ended December 31, 2014
1 590.000
Sales
$300,000
Cost of goods sold
Wages and other operating expenses.
Interest expense.
216,000
7,000
15,000
Income taxes expense
24,000
Depreciation expense.
Los on sale of equipment
Gain on retirement of bonds.
(562,000)
(6,000)
16,000
$ 38,000
Net income
Genesis Corp.
Balance Sheet
December 31, 2014 and 2013
2014
2013
Assets
Current assets:
$ 17,000
$ 12,000
40,000
70,000
Cash
Accounts receivable
60,000
Merchandise iventory
84.000
Prepaid expenses...
Total current assets..
6,000
4,000
S167,000
$126,000
Long-term assets:
Property, plant and equipment.
Less: Accumulated depreciation
$210,000
(48,000)
$288.000
$250,000
(60,000)
$357,000
Total assets.
Liabilities
Current liabilities:
Accounts payable
Interest payable
Income taxes payable
Total current lilabilities.
Long-term liabilities
Bonds payable-
$ 40,000
5 35,000
3,000
4,000
12,000
$ 56,000
22.000
S 60,000
64.000
$120.000
90,000
Total liabilities
$150,000
Equity
Contributed capital:
Common shares.
Retained earnings
Total equity
Total labilities and equity
$ 95,000
112,000
207,000
$ 80,000
88.000
168,000
$288,000
$357.000
A. Calculate the operating section of cash flow using the direct method with the
information provided on the next page
B. Calculate the financing section of cash flow using the same information from the next
page, assuming that the cash dividends were paid
C. Calculate the inventory turnover ratio with the information provided](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff257914a-4a46-452f-af2e-f486c232f16f%2Fb29fe283-06a6-479a-b72f-e8209433e9bc%2Fsdmgg1f_processed.png&w=3840&q=75)
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