Operating Cash Flow means that cash flow which is from the business main activity. Like sale of goods and paid salary, factory rent. Operating activity show that the inflow or outflow cash. Only that cash which is the main source of income and expense for the business. To discuss: Find net cash provided by operating activities for each company: a) What amount is from the operating activity for the year-end of Company-A and Company-B? b) What is the difference between the net income and net cash provided by the operating activity? c) Comparing the net income to net cash provided by operating activity, can you draw any conclusion as to the quality of each company’s earnings?

Question

Want to see the full answer?

Answer 1

Question

Chapter 11, Problem 66.2C

To determine

Operating Cash Flow means that cash flow which is from the business main activity. Like sale of goods and paid salary, factory rent.

Operating activity show that the inflow or outflow cash. Only that cash which is the main source of income and expense for the business.

To discuss:

Find net cash provided by operating activities for each company:

a) What amount is from the operating activity for the year-end of Company-A and Company-B?

b) What is the difference between the net income and net cash provided by the operating activity?

c) Comparing the net income to net cash provided by operating activity, can you draw any conclusion as to the quality of each company’s earnings?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Quinze Seize Corp. reported the following amounts in its statement of financial position at each year-end:a. What is the net cash provided by operating activities?b. What is the net cash used in investing activities?c. What is the net cash provided by financing activities?

Requirement: Prepare the statement of cash flows. Use the direct method of presenting cash flows from operating activities. I. Problem 1: Aling Dorry's cash balance on January 1, 2017 was P20,000. The following were the transactions that affected cash during the period: a. Collections from customers for the sale of goods, P580,000 b. Cash receipt from loan obtained from a bank, P180,000 c. Cash receipt from additional investment by owner, P20,000 d. Payments to suppliers for the purchase of inventory, P120,000 e. Payments for employees salaries, P140,000 f. Payments for rent expense, P70,000 g. Payments for utilities expense, P20,000 h. Payments for the acquisition of equipment, P200,000 i. Cash disbursements for drawings by owner, P60,000 II. State whether the following accounts is used added or deducted on the accrual basis profit. a. Depreciation expense _________________________ b. Losses on sale of PPE ________________________ c. Increase in inventory ________________________…

Using the financial statements and additional information below, prepare a cash flow statement for Papa Ltd for the year ended 31st December 2018 using the indirect method of calculating operating cash flow and write a brief comment on the cash flow for the period. Papa Ltd Statement of Profit or Loss Account for the year ended 31st December 2018 GHC Revenue 540,000 Cost of sales (155,000) Gross profit 385,000 Investment income – interest received 15,000 Loss on disposal of equipment (18,000) Depreciation (94,000) Administrative and selling expenses (25,000) Operating profit before interest 263,000 Interest expense (10,000) Profit before taxation 253,000 Taxation (56,000) Profit after tax 197,000 Statement of financial position as at 31st December 2018 2017 GHC GHC Non-current assets Vehicle at cost 180,000 150,000 Accumulated depreciation (137,000)…