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: Cash flows from operating activities refer to the cash received or cash paid in day-to-day operating activities of a company. Indirect method: Indirect method uses the accrual basis of accounting, where the Net Income is adjusted to determine the net cash provided from operating activities Prepare the operating activities section of the statement of cash flows. Company P Statement of Cash Flows – Indirect Method For the year ended Particulars Amount ($) Cash flow from operating activities: Net income 14,000 Add: Depreciation expense 8,500 Add: Loss on sale of equipment 2,500 Add: Decrease in accounts receivable (1) 10,000 Add: Increase in salaries payable (2) 11,000 Less: Decrease in other accrued liabilities (3) (2,000) Net cash provided by operating activities 44,000 Table (1) Working notes: Calculate decrease in accounts receivable: Decrease in accounts receivable ) = ( Accounts receivable of Prior year − Accounts receivable of Current year ) =$24,000 −<

9th Edition

ISBN: 9781259738692

Author: Libby

Publisher: MCG

See similar textbooks

Concept explainers

Reporting Cash Flows

Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows fro…

Balance Sheet

A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the …

Financial Statements

Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It…

Owner's Capital

Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expect…

Videos

Question

Chapter 12, Problem 12.10E

To determine

Present the operating activities section of the statement of cash flows for Company P using indirect method.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 12, Problem 12.9E

Chapter 12, Problem 12.11E

Students have asked these similar questions

Sagehen Enterprises reports pretax financial income of $80,000 for 2012. The following cause taxable income to be different from pretax financial income: Depreciation on the tax return is greater than depreciation on the income statement by $15,000. Rent collected on the tax return is $25,000 greater than rent earned on the income statement. Fines reported on the income statement were $10,000. The current tax rate is 30%. There are no deferred taxes at the beginning of 2012. Compute taxable income and income tax payable for 2012. Which of the differences are temporary, and which are permanent?(Cost Account)

Need help with this accounting questions

I need solution

Chapter 12 Solutions

Financial Accounting

Ch. 12 - Prob. 1Q Ch. 12 - Prob. 2Q Ch. 12 - Prob. 3Q Ch. 12 - What are the major categories of business...Ch. 12 - Prob. 5Q Ch. 12 - Prob. 6Q Ch. 12 - Prob. 7Q Ch. 12 - Prob. 8Q Ch. 12 - Compare the two methods of reporting cash flows...Ch. 12 - Prob. 10Q

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:9781285595047
Author:Weil
Publisher:Cengage