Which of the following would not be added to net income in calculating cash flows from operating activities on a statement of cash flows prepared usingthe indirect method?Multiple ChoiceA decrease in Accounts Receivable.Amortization Expense.A gain on sale of equipment.An increase in Salaries and Wages Payable.

The question's central theme is to assess your grasp of the adjustments applied to net income when…

Answered: Which of the following would not be…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A measure that helps estimate the amount and timing of cash flows from operating activities is the cash flow on total assets ratio. True or False True False
In a statement of cash flows using indirect method, an increase ininventory is A. deducted from Net IncomeB. reported as an outflow of cashC. added to net incomeD. no effect on cash flows
Indicate whether each item should be added to or subtracted from net income to arrive at the net cash flow from operating activities. a. Increase in inventory b. Amortization of discount on investment in bonds c. Decrease in accounts payable d. Amortization of discount on bonds payable e. Increase in salaries payable f. Increase in prepaid expenses g. Subsidiary loss under the equity method h. Gain on disposal of equipment i. Decrease in accounts receivable j. Increase in deferred tax liability
When preparing a statement of cash flows, cash equivalents are subtracted from cash in order to calculate the net change in cash during a period. True False
a. Prepare the Cash Flows from (used for) 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. Statement of Cash Flows (partial) Cash flows from (used for) operating activities: Net income ✓ Adjustments to reconcile net income to net cash flows from (used for) operating activities: Depreciation expense ✓ ✓ Gain on disposal of equipment ✓ Changes in current operating assets and liabilities: Increase in accounts receivable Decrease in inventory Decrease in prepaid insurance Decrease in accounts payable Increase in income taxes payable Net cash flows from operating activities Feedback 00 00000
Does the statement of cash flows report only transactions that cause an increase or a decrease in cash? Explain.
Perhaps the most noteworthy item reported on an income statement is net income—the amount by which revenues exceed expenses. The most noteworthy item reported on a statement of cash flows is not the amount of net cash flows. Explain.
If the balance in prepaid expensel increases during the year, what action should be taken on the statement of cash flows when following the indirect method, and why? O The net change in prepaid expenses should be subtracted from net income, because the net increase in prepaid expenses impacted net income but did not reduce the cash balance. The net change in prepaid expenses should be added to net income, because the net increase in prepaid expenses impacted net income but did not increase the cash balance. O The net change in prepaid expenses should be added to net income, because the net increase in prepaid expenses did not impact net income but did increase the cash balance. The net change in prepaid expenses should be subtracted from net income, because the net increase in prepaid expenses did not impact net income but did reduce the cash balance None of the above.
When Generating a Statement of Cash Flows, the direct method of preparation would result in a greater value in Net Cash Provided by Operating Activities then the Indirect Method True False
Which of the following has a different effect on net profit than it does on cashflow? A.Cash sale to customer B.Payment for wages C.Payment for rent D.Depreciation of equipment
Which of the following statements about the direct and indirect methods for presenting Cash Flow Statement is NOT true? According to the indirect method, cash flows begin with net income or loss and is followed by subsequent additions to or deductions from that amount for non-cash revenue and expense items, resulting in cash flow from operating activities. The direct method is based on use of actual cash inflows and outflows from a company’s operations. Using direct and indirect methods leads to different amounts shown as cash flow from operations, investing, and financing activities. The cash flow statement, income statement and balance sheet are interconnected: the cash flow amount is equal to the corresponding income statement amount plus or minus the change in the related balance sheet account.
Is it possible to have “record net income” for a quarter and negative cash flows at the same time? Be specific in your response as to how you would, or would not, be able to see this in the financial statements.

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

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,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

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

SEE MORE TEXTBOOKS