Cash Flows from Operating Activities-Indirect Method The income statement disclosed the following items for the year: Depreciation expense Gain on disposal of equipment. Net income The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) $7,260 (4,130) (1,550) (4,920) 1,550 1,090 Accounts receivable Inventory Prepaid insurance Accounts payable Income taxes payable. Dividends payable a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustmen Statement of Cash Flows (partial) For the year ended Dec. 31, -- Cash flows from operating activities: $46,600 27,190 341,500 Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: Net cash flow from operating activities b. Why is net cash flows from operating activities different than net income? Cash flows from operating activities is based on ( 00000000 of accounting, whereas net income is computed using of accounting.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Cash Flows from Operating Activities-Indirect Method
The income statement disclosed the following items for the year:
Depreciation expense
Gain on disposal of equipment
Net income
The changes in the current asset and liability accounts for the year are as follows:
Increase (Decrease)
$7,260
(4,130)
(1,550)
(4,920)
1,550
1,090
Accounts receivable
Inventory
Prepaid insurance
Accounts payable
Income taxes payable
Dividends payable
a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.
$46,600
27,190
341,500
Statement of Cash Flows (partial)
For the year ended Dec. 31, --
Cash flows from operating activities:
Adjustments to reconcile net income to net cash flow from operating activities:
Changes in current operating assets and liabilities:
Net cash flow from operating activities
b. Why is net cash flows from operating activities different than net income?
Cash flows from operating activities is based on
Q☐☐☐☐☐☐☐
of accounting, whereas net income is computed using
of accounting.
Transcribed Image Text:Cash Flows from Operating Activities-Indirect Method The income statement disclosed the following items for the year: Depreciation expense Gain on disposal of equipment Net income The changes in the current asset and liability accounts for the year are as follows: Increase (Decrease) $7,260 (4,130) (1,550) (4,920) 1,550 1,090 Accounts receivable Inventory Prepaid insurance Accounts payable Income taxes payable Dividends payable a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. $46,600 27,190 341,500 Statement of Cash Flows (partial) For the year ended Dec. 31, -- Cash flows from operating activities: Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: Net cash flow from operating activities b. Why is net cash flows from operating activities different than net income? Cash flows from operating activities is based on Q☐☐☐☐☐☐☐ of accounting, whereas net income is computed using of accounting.
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