Statement of cash flows : Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company. Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. Indirect method of cash flow from operating activities: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities . Deduct increase in current assets Deduct decrease in current liabilities Add decrease in current assets Add the increase in current liability Add depreciation expense and amortization expense Add loss on sale of plant assets Less gain on sale of plant assets Cash flow from investing activities: This section of cash flows statement provides information concerning about the purchase and sale of capital assets by the company. Cash flow from financing activities: This section of cash flows statement provides information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends. To prepare: The statement of cash flow of Company P under indirect method.

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Chapter 11, Problem 11.10E

To determine

Statement of cash flows:

Statement of cash flow is a financial statement that shows the cash and cash equivalents of a company for a particular period of time. It shows the net changes in cash, by reporting the sources and uses of cash as a result of operating, investing, and financing activities of a company.

Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company.

Indirect method of cash flow from operating activities: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.

Deduct increase in current assets

Deduct decrease in current liabilities

Add decrease in current assets

Add the increase in current liability

Add depreciation expense and amortization expense

Add loss on sale of plant assets

Less gain on sale of plant assets

Cash flow from investing activities: This section of cash flows statement provides information concerning about the purchase and sale of capital assets by the company.

Cash flow from financing activities: This section of cash flows statement provides information about the cash inflow and outflow as a result of issuance and financing of debt, issue of new stock and payment of dividends.

To prepare: The statement of cash flow of Company P under indirect method.

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