Explanation 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 are the cash produced by the normal business operations. Indirect method: 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. The net cash provided by operating activities during 2018 under indirect method is calculated as follows: Incorporation C Statement of Cash Flows Year Ended December 31, 2018 Particulars $ $ Cash flows from operating activities: Net income $35,500 Adjustments to reconcile net income to net cash used for operating activities: Gain on sale of plant asset -10,000 Depreciation expense $7,500 Decrease in accounts receivable (1) 5,000 Increase in inventory (2) -1,000 Decrease in accounts payable (3) -1,000 Increase in accrued liability (4) 8,000 8,500 Net cash used for operating activities 44,000 Cash flows from investing activities: Hence, the amount of net cash provided by operating activities is $44,000 . Working note: Calculate the changes in accounts receivables. Changes in Accounts receivables } = [ Accounts receivables ( 2018 ) –Accounts receivables ( 2017 ) ] =$6,000 – $11,000 = − $5,000 (1) Calculate the changes in inventory

Financial Accounting (12th Edition) (What's New in Accounting)

12th Edition

ISBN: 9780134725987

Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

Publisher: PEARSON

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Chapter 11, Problem 11.49Q

To determine

To compute: The net Cash flows from operating activities for 2018 under indirect method.

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Chapter 11, Problem 11.48Q

Chapter 11, Problem 11.50Q

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Chapter 11 Solutions

Financial Accounting (12th Edition) (What's New in Accounting)

Ch. 11 - Quick Check (Answers are given here) The statement...Ch. 11 - Prob. 2QC Ch. 11 - Prob. 3QC Ch. 11 - Which of the three types of activities reported on...Ch. 11 - Prob. 5QC Ch. 11 - On the statement of cash flows, which of the...Ch. 11 - On the statement of cash flows, which of the...Ch. 11 - Prob. 8QC Ch. 11 - Prob. 9QC Ch. 11 - Which of the following transactions does not...

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