The income statement disclosed the following items for the year: Depreciation expense Gain on disposal of equipment 20,860 $35,800 Net income 309,100 The changes in the current asset and liability accounts for the year are as follows: Increase

The income statement disclosed the following items for the year: Depreciation expense Gain on disposal of equipment 20,860 $35,800 Net income 309,100 The changes in the current asset and liability accounts for the year are as follows: Increase

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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Question

Cash flow from operating activity????

The income statement disclosed the following items for the year:
Depreciation expense
$35,800
Gain on disposal of equipment 20,860
Net income
309,100
The changes in the current asset and liability accounts for the year are as follows:
Increase
(Decrease)
Accounts receivable $5,570
(3,170)
Inventory
Prepaid insurance
(1,190)
Accounts payable
(3,780)
Income taxes payable 1,190
Dividends payable
830

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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