Chapter 12, Problem 1PSB

Summary Introduction

Introduction:

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 of cash flows can be prepared using the direct or indirect method. Under the indirect method, the net income is taken as basis and adjustments are made for noncash and nonoperating items of finding the net operating cash flows.

To prepare:the operating activities section of the statement of cash flow using the indirect method.