What is the reporting purpose of the statement of cash flows ? Identify at least two questions that this statement can answer.

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Answer 1

Textbook Question

Chapter 12, Problem 1DQ

What is the reporting purpose of the statement of cash flows? Identify at least two questions that this statement can answer.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution & Answer

Summary Introduction

Concept Introduction:

The statement of cash flows is one of the financial statements. This statement is prepared at the end of a particular period to know the cash flows of the business. The statement is prepared using the direct or indirect method.

To indicate: the reporting purpose of the statement of cash flows.

Explanation of Solution

Financial statements are prepared at the end of the accounting period to know the financial position of the business. The statement of cash flows is one of the four financial statements; income statement, balance sheet, statement of owner’s equity, and statement of cash flows. The statement of cash flows is prepared to know the cash flow position of the business. The statement shows cash flows under three different types of business activities; operating activities, investing activities, and financing activities. The operating activities section of the statement can be prepared using the direct or indirect method. Two questions indicating the purpose of the statement of cash flows are as follows:

1. What is the net operating cash inflow or outflow of the business?

2. What is the net change in the cash balance during the period?

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Brighton Components is operating at 80% capacity. A European automaker has offered to purchase 25,000 units of a specialized engine component for $150 per unit. The vice president of sales believes this order will provide access to new markets, but the VP of finance is concerned about its profitability. To determine variable and fixed costs, Brighton's accountant used the high-low method with the following production and cost data: • • Production of 200,000 units: Total costs = $35,600,000 Production of 240,000 units: Total costs = $41,200,000 Additionally, the order will require an additional shipping cost of $4 per unit, a setup cost of $180,000, and a special machine lease of $200,000.

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Answer 2

Textbook Question

Chapter 12, Problem 1DQ

What is the reporting purpose of the statement of cash flows? Identify at least two questions that this statement can answer.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution & Answer

Summary Introduction

Concept Introduction:

The statement of cash flows is one of the financial statements. This statement is prepared at the end of a particular period to know the cash flows of the business. The statement is prepared using the direct or indirect method.

To indicate: the reporting purpose of the statement of cash flows.

Explanation of Solution

Financial statements are prepared at the end of the accounting period to know the financial position of the business. The statement of cash flows is one of the four financial statements; income statement, balance sheet, statement of owner’s equity, and statement of cash flows. The statement of cash flows is prepared to know the cash flow position of the business. The statement shows cash flows under three different types of business activities; operating activities, investing activities, and financing activities. The operating activities section of the statement can be prepared using the direct or indirect method. Two questions indicating the purpose of the statement of cash flows are as follows:

1. What is the net operating cash inflow or outflow of the business?

2. What is the net change in the cash balance during the period?

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Answer 3

Textbook Question

Chapter 12, Problem 1DQ

What is the reporting purpose of the statement of cash flows? Identify at least two questions that this statement can answer.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution & Answer

Summary Introduction

Concept Introduction:

The statement of cash flows is one of the financial statements. This statement is prepared at the end of a particular period to know the cash flows of the business. The statement is prepared using the direct or indirect method.

To indicate: the reporting purpose of the statement of cash flows.

Explanation of Solution

Financial statements are prepared at the end of the accounting period to know the financial position of the business. The statement of cash flows is one of the four financial statements; income statement, balance sheet, statement of owner’s equity, and statement of cash flows. The statement of cash flows is prepared to know the cash flow position of the business. The statement shows cash flows under three different types of business activities; operating activities, investing activities, and financing activities. The operating activities section of the statement can be prepared using the direct or indirect method. Two questions indicating the purpose of the statement of cash flows are as follows:

1. What is the net operating cash inflow or outflow of the business?

2. What is the net change in the cash balance during the period?

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Answer 4

Textbook Question

Chapter 12, Problem 1DQ

What is the reporting purpose of the statement of cash flows? Identify at least two questions that this statement can answer.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution & Answer

Summary Introduction

Concept Introduction:

The statement of cash flows is one of the financial statements. This statement is prepared at the end of a particular period to know the cash flows of the business. The statement is prepared using the direct or indirect method.

To indicate: the reporting purpose of the statement of cash flows.

Explanation of Solution

Financial statements are prepared at the end of the accounting period to know the financial position of the business. The statement of cash flows is one of the four financial statements; income statement, balance sheet, statement of owner’s equity, and statement of cash flows. The statement of cash flows is prepared to know the cash flow position of the business. The statement shows cash flows under three different types of business activities; operating activities, investing activities, and financing activities. The operating activities section of the statement can be prepared using the direct or indirect method. Two questions indicating the purpose of the statement of cash flows are as follows:

1. What is the net operating cash inflow or outflow of the business?

2. What is the net change in the cash balance during the period?

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

Summary Introduction

Concept Introduction:

The statement of cash flows is one of the financial statements. This statement is prepared at the end of a particular period to know the cash flows of the business. The statement is prepared using the direct or indirect method.

To indicate: the reporting purpose of the statement of cash flows.

Explanation of Solution

Financial statements are prepared at the end of the accounting period to know the financial position of the business. The statement of cash flows is one of the four financial statements; income statement, balance sheet, statement of owner’s equity, and statement of cash flows. The statement of cash flows is prepared to know the cash flow position of the business. The statement shows cash flows under three different types of business activities; operating activities, investing activities, and financing activities. The operating activities section of the statement can be prepared using the direct or indirect method. Two questions indicating the purpose of the statement of cash flows are as follows:

1. What is the net operating cash inflow or outflow of the business?

2. What is the net change in the cash balance during the period?

Answer 8

Expert Solution & Answer

Summary Introduction

Concept Introduction:

The statement of cash flows is one of the financial statements. This statement is prepared at the end of a particular period to know the cash flows of the business. The statement is prepared using the direct or indirect method.

To indicate: the reporting purpose of the statement of cash flows.

Explanation of Solution

Financial statements are prepared at the end of the accounting period to know the financial position of the business. The statement of cash flows is one of the four financial statements; income statement, balance sheet, statement of owner’s equity, and statement of cash flows. The statement of cash flows is prepared to know the cash flow position of the business. The statement shows cash flows under three different types of business activities; operating activities, investing activities, and financing activities. The operating activities section of the statement can be prepared using the direct or indirect method. Two questions indicating the purpose of the statement of cash flows are as follows:

1. What is the net operating cash inflow or outflow of the business?

2. What is the net change in the cash balance during the period?

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Summary Introduction

Concept Introduction:

The statement of cash flows is one of the financial statements. This statement is prepared at the end of a particular period to know the cash flows of the business. The statement is prepared using the direct or indirect method.

To indicate: the reporting purpose of the statement of cash flows.

Answer 12

Explanation of Solution

Financial statements are prepared at the end of the accounting period to know the financial position of the business. The statement of cash flows is one of the four financial statements; income statement, balance sheet, statement of owner’s equity, and statement of cash flows. The statement of cash flows is prepared to know the cash flow position of the business. The statement shows cash flows under three different types of business activities; operating activities, investing activities, and financing activities. The operating activities section of the statement can be prepared using the direct or indirect method. Two questions indicating the purpose of the statement of cash flows are as follows:

1. What is the net operating cash inflow or outflow of the business?

2. What is the net change in the cash balance during the period?

Answer 13

Ch. 12 - What is the reporting purpose of the statement of...Ch. 12 - Prob. 2DQ Ch. 12 - Prob. 3DQ Ch. 12 - Describe the direct method of reporting cash flows...Ch. 12 - Prob. 5DQ Ch. 12 - Prob. 6DQ Ch. 12 - Prob. 7DQ Ch. 12 - Prob. 8DQ Ch. 12 - Prob. 9DQ Ch. 12 - Prob. 10DQ

What is the reporting purpose of the statement of cash flows ? Identify at least two questions that this statement can answer.

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