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. Direct method: This method uses the basis of cash for preparing the cash flows statement. Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts, and cash payments during the year. A. Cash Receipts: It encompasses all the cash receipts from sale of goods, and on account receivable. B. Cash Payments: It encompasses all the cash payments that are made to suppliers of goods, and all expenses that are paid. 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. Deduct the amount of cash used to purchase any fixed assets. Add the amount of cash received from sale of any fixed asset. 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. Add the amount of cash received from any sources of finance. Deduct the amount of cash used for payment for dividend and interest from financing activities. Deduct the amount of cash used for payment of treasury stock from financing activities. To Prepare: Statement of cash flows of W Company using Direct method.

Question

Want to see the full answer?

Answer 1

Question

Chapter 12, Problem 12.14E

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.

Direct method: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts, and cash payments during the year.

A. Cash Receipts: It encompasses all the cash receipts from sale of goods, and on account receivable.

B. Cash Payments: It encompasses all the cash payments that are made to suppliers of goods, and all expenses that are paid.

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.

Deduct the amount of cash used to purchase any fixed assets.

Add the amount of cash received from sale of any fixed asset.

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.

Add the amount of cash received from any sources of finance.

Deduct the amount of cash used for payment for dividend and interest from financing activities.

Deduct the amount of cash used for payment of treasury stock from financing activities.

To Prepare: Statement of cash flows of W Company using Direct method.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Answer this Question accurately

To identify all those employees receiving payroll cheques but who have no matching record in a payroll master file, you should use a: a. Auditor b. Find unmatched records query c. Update query d. Cross-tabs query

Lupita is a paid Tax return prepare. She failed to sign 10 tax returns which she prepared. What is the amount of the penalty with which she could be assessed?