Explain the reason behind that an increase in inventory of $50,000 during the year must be included in computing cash flows from operating activities under both the direct and indirect methods.

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Chapter 12, Problem 8Q

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Explain the reason behind that an increase in inventory of $50,000 during the year must be included in computing cash flows from operating activities under both the direct and indirect methods.

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IV. Please prepare a vertical and horizontal analysis for the following statement of cash flow for the year 2020 and compare it with the year 2019. Identify and explain 5 of the most important issues.

Using the Exhibit below, assume that the amount of Net Income on the Income Statement for the year was $100,000. When preparing the Statement of Cash Flow using the indirect method for the current year, which of the following statements would describe the proper presentation of net income on the Cash flow from operating activities section? EXHIBIT Increase (Decrease) Net Income (loss) $XXX Adjustments to reconcile net income to net cash flow from operating activities: Depreciation of fixed assets XXX Losses on disposal of assets XXX Gains on disposal of assets (XXX) Changes in current operating assets and liabilities:…

Use the Indirect Method to calculate the Cash Flow form operation activities, when net income is 100,000 and depreciation amount is 4500. Additionally, the beginning of period balance for accounts receivable, Inventory and Accounts Payable are 5600, 4500 and 3500, respectively. While, the End of period balances for accounts receivable, Inventory and Accounts Payable are 8100, 3500 and 4800, respectively.

Answer 2

Question

Chapter 12, Problem 8Q

To determine

Explain the reason behind that an increase in inventory of $50,000 during the year must be included in computing cash flows from operating activities under both the direct and indirect methods.

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Answer 3

Question

Chapter 12, Problem 8Q

To determine

Explain the reason behind that an increase in inventory of $50,000 during the year must be included in computing cash flows from operating activities under both the direct and indirect methods.

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Answer 4

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Chapter 12, Problem 8Q

To determine

Explain the reason behind that an increase in inventory of $50,000 during the year must be included in computing cash flows from operating activities under both the direct and indirect methods.

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Answer 5

Chapter 12, Problem 8Q

To determine

Explain the reason behind that an increase in inventory of $50,000 during the year must be included in computing cash flows from operating activities under both the direct and indirect methods.

Answer 6

Chapter 12, Problem 8Q

To determine

Explain the reason behind that an increase in inventory of $50,000 during the year must be included in computing cash flows from operating activities under both the direct and indirect methods.

Answer 7

Chapter 12, Problem 8Q

To determine

Explain the reason behind that an increase in inventory of $50,000 during the year must be included in computing cash flows from operating activities under both the direct and indirect methods.

Answer 8

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Answer 11

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

Explain the reason behind that an increase in inventory of $50,000 during the year must be included in computing cash flows from operating activities under both the direct and indirect methods.

Solution Summary: The author explains that an increase in inventory of 50,000 during the year must be included in computing cash flows from operating activities under both the direct and indirect methods.

Explain the reason behind that an increase in inventory of $50,000 during the year must be included in computing cash flows from operating activities under both the direct and indirect methods.

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Chapter 12 Solutions