Fundamentals Of Financial Accounting
6th Edition
ISBN: 9781260159516
Author: PHILLIPS
Publisher: MCG
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Textbook Question
Chapter 12, Problem 3ME
Determining the Effects of Account Changes on
Indicate whether each item would be added (+) or subtracted (−) in the computation of cash flow from operating activities using the indirect method.
______ 1.
______ 2. Inventory decrease.
______ 3. Accounts payable decrease.
______ 4.
______ 5. Accrued liabilities increase.
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Indicate whether each item would be added ( 1 ) or subtracted ( 2 ) in the computation of cash flowfrom operating activities using the indirect method.1. Depreciation.2. Inventory decrease.3. Accounts payable decrease.4. Accounts receivable increase.5. Accrued liabilities increase.
The method of presenting cash flow from operations where net income is adjusted for items without any cash effect is called
a. direct method
b. indirect method
c. allowance method
d. reconciliation method
Which of the following would be subtracted from net income when using the indirect method to derive net cash from operating activities?
a. Decrease in accounts payable
b. Loss on sale of investments
c. Decrease in accounts receivable
d. Depreciation expense
Chapter 12 Solutions
Fundamentals Of Financial Accounting
Ch. 12 - Compare the purposes of the income statement, the...Ch. 12 - Prob. 2QCh. 12 - Prob. 3QCh. 12 - What are the major categories of business...Ch. 12 - Prob. 5QCh. 12 - Describe the types of items used to compute cash...Ch. 12 - Under the indirect method, depreciation expense is...Ch. 12 - Prob. 8QCh. 12 - Explain why a 50,000 increase in inventory during...Ch. 12 - Prob. 10Q
Ch. 12 - As a junior analyst, you are evaluating the...Ch. 12 - Prob. 12QCh. 12 - Prob. 13QCh. 12 - Prob. 14QCh. 12 - (Supplement 12A) How is the sale of equipment...Ch. 12 - Prob. 1MCCh. 12 - Prob. 2MCCh. 12 - Prob. 3MCCh. 12 - Prob. 4MCCh. 12 - Which of the following would not appear in the...Ch. 12 - Prob. 6MCCh. 12 - Prob. 7MCCh. 12 - Prob. 8MCCh. 12 - The total change in cash as shown near the bottom...Ch. 12 - Prob. 10MCCh. 12 - Prob. 1MECh. 12 - Matching Items Reported to Cash Flow Statement...Ch. 12 - Determining the Effects of Account Changes on Cash...Ch. 12 - Computing Cash Flows from Operating Activities...Ch. 12 - Prob. 5MECh. 12 - Computing Cash Flows from Investing Activities...Ch. 12 - Computing Cash Flows from Financing Activities...Ch. 12 - Computing Cash Flows Under IFRS Using the data...Ch. 12 - Prob. 9MECh. 12 - Interpreting Cash Flows from Operating, Investing,...Ch. 12 - Matching Items Reported to Cash Flow Statement...Ch. 12 - Computing Cash Flows from Operating Activities...Ch. 12 - Prob. 13MECh. 12 - Matching items Reported to Cash Flow Statement...Ch. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Prob. 4ECh. 12 - Prob. 5ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Reporting and Interpreting Cash Flows from...Ch. 12 - Prob. 10ECh. 12 - Prob. 11ECh. 12 - Inferring Balance Sheet Changes from the Cash Flow...Ch. 12 - Prob. 13ECh. 12 - Prob. 14ECh. 12 - Prob. 15ECh. 12 - Prob. 16ECh. 12 - Prob. 17ECh. 12 - Prob. 18ECh. 12 - Prob. 19ECh. 12 - Prob. 20ECh. 12 - Prob. 21ECh. 12 - Prob. 22ECh. 12 - (Supplement 12B) Preparing a Statement of Cash...Ch. 12 - Determining Cash Flow Statement Effects of...Ch. 12 - Prob. 2CPCh. 12 - Prob. 3CPCh. 12 - Preparing and Interpreting a Statement of Cash...Ch. 12 - Prob. 5CPCh. 12 - Prob. 6CPCh. 12 - (Supplement 12A) Preparing and Interpreting a...Ch. 12 - Prob. 1PACh. 12 - Prob. 2PACh. 12 - Prob. 3PACh. 12 - Preparing and Interpreting a Statement of Cash...Ch. 12 - Computing Cash Flows from Operating Activities...Ch. 12 - Prob. 6PACh. 12 - (Supplement 12A) Preparing and Interpreting a...Ch. 12 - Prob. 1PBCh. 12 - Prob. 2PBCh. 12 - Prob. 3PBCh. 12 - Preparing and Interpreting a Statement of Cash...Ch. 12 - Prob. 5PBCh. 12 - Prob. 6PBCh. 12 - Prob. 1SDCCh. 12 - Prob. 2SDCCh. 12 - Prob. 6SDCCh. 12 - Prob. 7SDCCh. 12 - Prob. 8SDCCh. 12 - Prob. 9SDCCh. 12 - Prob. 1CC
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- In computing the periods net operating cash flows, why are noncash expenses added back to net income?arrow_forwardWhat adjustment(s) should be made to reconcile net income to net cash flows from operating activities (indirect method) considering the following balances in current assets?arrow_forwardUnder the direct method of preparing a statement of cash flows, what adjustment is made for depreciation expense?arrow_forward
- Reporting Net Cash Flow from Operating Activities The following information is available for Cornelius Inc: Required: 1. Compute the net cash flows from operating activities using the indirect method. 2. CONCEPTUAL CONNECTION Explain why Cornelius was able to report net cash flow from operating activities that was higher than net income. 3. CONCEPTUAL CONNECTION What could the difference between net income and cash flow from operating activities signal to financial statement users?arrow_forwardIn computing the periods net operating cash flows, why are increases in current liabilities and decreases in current assets added back to net income?arrow_forwardWhich of the following should be added to net income in calculating net cash flow from operating activities using the INDIRECT method? A. A decrease in accounts payable. B. A decrease in accounts receivable. C. Preferred dividends declared and paid. D. An increase in inventory.arrow_forward
- Which of the following is the adjustment that is added during the reconciliation of net income to operating cash flows in indirect method? Select one: a. An increase in Prepaid Expenses b. Amortization Expense c. An increase in Accounts Receivable d. Gain on sale of capital assetsarrow_forwardWhich of the following should be subtracted from net income in computing net cash flows from operating activities using the indirect method? a.A decrease in inventory b.A decrease in prepaid expenses c.An increase in inventory d.An increase in accrued expensesarrow_forwardWhen deducing cash flow numbers, which of the following refers to a reflection of value? Select an answer: accounts receivable wage expenses accounts payable income statementarrow_forward
- When preparing a statement of cash flows, a decrease in accounts receivable during a period would cause which one of the following adjustments in determining cash flow from operating activities? Direct Method Indirect Method IncreaseDecrease DecreaseIncrease IncreaseIncrease DecreaseDecreasearrow_forwardPlease classify each of the following accounts into its right category of cash flow activities. Which of the following item(s) belong to Operation Activities? (This question may contain multiple answers) Depreciation Fixed assets expenses Change in Inventories Change in Accounts Payable Payment of cash dividends Change in Notes Payable Payment of long-term debt Change in marketable securities Net income Change in ACcount Receivablesarrow_forwardindicate whether each of the following would be added to be or deducted from net income in determining net cash flow from operating activities by the indirect method: decrease in inventoryarrow_forward
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