QS 12-4 (Static) Indirect: Computing cash flows from operations LO P2Cain Incorporated reports net income of $15,000. Its comparative balance sheet shows the following changes: accounts receivableincreased $6,000; inventory decreased $8,000; prepaid insurance decreased $1,000; accounts payable increased $3,000; and taxespayable decreased $2,000. Compute cash flows from operations using the indirect method.Note: Amounts to be deducted should be indicated by a minus sign.Cash Flows from Operating Activities (Indirect)Adjustments to reconcile net income to net cash provided by operating activitiesChanges in current assets and liabilities$

The cash flow statement is a financial statement which shows the inflow and outflow of cash of the…

Answered: Compute cash flows from operations…

Business

Accounting

Compute cash flows from operations using the indirect method. ted should be indicated by a minus sign.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Describe the direct method and indirect method of preparing the cash flow statement, and discuss the…

A: The cash flow statement is a financial statement that shows the inflows and outflows of cash and…

Q: What is the purpose of the statement of cash flows?

A: The internal cash flows the business encounters is not accounted for in the income statement or the…

Q: Contrast the direct and indirect methods of calculating net cash flow from operating activities.

A: A Cash flow statement is a financial statement that provides the summarised information regarding…

Q: Which of the following method will be adopted to disclose Cash equivalents in the balance sheet? a.…

A: Historical cost method will be adopted to disclose Cash equivalents in the balance sheet....…

Q: What are normal and nonnormal cash flows?

A: Answer: Normal cash flows projects are those in which one or two cash outflows occur at the outset…

Q: Understand the usefulness of the statement of cash flows.

A: Statement of cash flows: Statement of cash flow is a financial statement that shows the cash and…

Q: Net cash flow is equal to

A: Net cash flow alludes to the variation between cash inflows and outflows over a specific period of…

Q: What are the sections of the cash flow statement? Why is it divided this way?

A: We look at the financial statements of a company to analyze its financial position and health.…

Q: Explain Primary Elements of the Statement of Cash Flows.

A: Statement of cash flows: This statement reports all the cash transactions which are responsible for…

Q: The PW-criterion accounts for the time value of money by converting the cash flows to the period…

A: Present worth (PW) is the current value of the future cash flow, for the specific time at specific…

Q: Explain the purpose of the statement of cash flows and why it is necessary.

A: A statement of cash flow is a simple financial report that shows a company's cash inflows (cash…

Q: The cash flow on total assets ratio Is computed by dividing average total assets by operating in-…

A: Cash flow on total assets is an efficiency ratio that analyzes real cash flows to business assets…

Q: Give two difference between net profit and cash from operations.

A: Difference between net income and cash from operations:Net income is the profit generated by the…

Q: Determine cash flows from operating activities by the indirect method.

Q: Describe similarities between the indirect and the direct method of te statement of cash flow.…

A: Cash flow Statement-It is a statement that shows inflows and outflows of the cash and cash…

Q: Explain the usefulness of the statement of cash flows

A: Statement of cash flows: Statement of cash flow is a financial statement that shows the cash and…

Q: Give a specimen of cash flow statement of indirect method using imaginary figures?

A: Main purpose of financial statements is to review and analyse position of the business as on…

Q: Which of the following should NOT be taken into account in calculating free cash flow? Select one:…

A: Free Cash Flow = Net income + Depreciation – Change in Working Capital – Capital Expenditure

Q: What are the basic differences in the direct method vs. the indirect method of presenting the…

A: Statement of cash flows is one of the financial statement which shows all cash inflows and cash…

Q: The formula to compute free cash flow is

A: The formula to compute free cash flow is here:

Q: Compute net cash flows from operating activities using the indirect method.

A: In financial bookkeeping, working income (OCF) alludes to the measure of cash an organization…

Q: What is the difference between the Direct Method and Indirect Method for calculating Cash Flow

A: Introduction A company's total production and cash outflow is referred to as its cash flow. Accounts…

Q: What is the purpose of the statement of cash flows? What are the three types of cash flow…

A: cash flow statement are the statement which show the position of cash on particular date. These…

Q: Briefly state the purposes of a statement of cash flows.

A: Meaning of Cash Flow Statements Cash Flow Statements provide information about the movements in cash…

Q: What kind of activities are mentioned on the cash flow statement? Is the sequence in which these…

A: A cash flow statement is a basic financial report that depicts a company's cash inflows (cash…

Q: STATEMENT OF PROFIT AND LOSS PT UHUY FOR THE YEAR ENDED 31ST DECEMBER 2019 Sales 1,246,000 Cost of…

A: Statement of cash flowsFor the year December 31, 2019 Cash flow from operating activities:…

Q: The primary formula for calculating operating cash flow is?

A: Cash flow from operating activities refers to the amount of cash generated by the operating…

Q: Determine cash flows from operating activities by the direct method.

A: “As it asked here to find out the cash flows from operating activities by the direct method without…

Q: What kind of operations are listed on the cash flow statement? Is it important the order these…

A: A cash flow statement is a basic financial report that depicts a company's cash inflows (cash…

Q: Discuss why the Free Cash Flow can not be calculated directly by taking the numbers from Cash Flow…

A: Free cash flow which is also written as FCF is the amount of cash which has been left after payment…

Q: Explain the purpose of the statement of cash flows and why it is necessary.

A: Statement of cash flow is the part of financial statements. It is more classified version of simple…

Q: tructions: Prepare a statement of cash flows using the indirect method.

A: The statement of cash flow is a financial statement indicating the cash coming in and going out of a…

Q: there are 2 categories of cash flows: single cash flows, referred to as "lump sums," and annuities.…

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: The difference between cash inflows and cash outflows is known as what?

A: Cash flow is defined as the flow of money that comes in (cash inflow) and out of your (cash outflow)…

Q: there are two policies to consider when payment period is less than compounding period. These are…

A: When payment period is more than the compounding period for a single amount, there are an infinite…

Question

QS 12-4 (Static) Indirect: Computing cash flows from operations LO P2
Cain Incorporated reports net income of $15,000. Its comparative balance sheet shows the following changes: accounts receivable
increased $6,000; inventory decreased $8,000; prepaid insurance decreased $1,000; accounts payable increased $3,000; and taxes
payable decreased $2,000. Compute cash flows from operations using the indirect method.
Note: Amounts to be deducted should be indicated by a minus sign.
Cash Flows from Operating Activities (Indirect)
Adjustments to reconcile net income to net cash provided by operating activities
Changes in current assets and liabilities
$

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Calculate the cash flow from operating activity

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

All parts detailed or skip
Please explain how to prepare a statement of cash flows (indirect method) including analyzing tables? Please provide an example. Thank you,
How can we show mathematically that the two approaches cash flow from operation and net income are identical?
a. explain the information found on the statement of cash flow. b. how do the direct and indirect methods of preparing the statement of cash flow different?
Compare the direct method and the indirect method of cash flows by explaining each method
The two approaches to reporting cash flows provided by operating activities are the a. the liquidity and profitability methods. b. the basic and standard methods. c. direct and indirect methods. d. the gross margin and contribution margin methods.
What are the key steps in preparing the Statement of Cash Flows, using the indirect method?
A cash flow table is basically a two-column table, in which the first column lists the time periods and the second column lists the corresponding cash flows Select one: O True O False