5th Edition

ISBN: 9780078025914

Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby

Publisher: McGraw-Hill Education

Concept explainers

Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows fro…

Balance Sheet

A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the …

Financial Statements

Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It…

Owner's Capital

Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expect…

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Textbook Question

Chapter 12, Problem 9Q

Explain why a $50,000 increase in inventory during the year must he included in computing cash flows from operating activities under both the direct and indirect methods.

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Chapter 12, Problem 8Q

Chapter 12, Problem 10Q

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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:…

Using the Exhibit below, assume that the balance of Accounts Payable was $60,000 at the beginning of the current year. Furthermore, assume that the balance of Accounts Payable is $65,000 at the end of the current year. 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 accounts payable 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…

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.

Chapter 12 Solutions

Fundamentals of Financial Accounting

Ch. 12 - Compare the purposes of the income statement, the...Ch. 12 - Prob. 2Q Ch. 12 - Prob. 3Q Ch. 12 - What are the major categories of business...Ch. 12 - Prob. 5Q Ch. 12 - Describe the types of items used to compute cash...Ch. 12 - Under the indirect method, depreciation expense is...Ch. 12 - Prob. 8Q Ch. 12 - Explain why a 50,000 increase in inventory during...Ch. 12 - Prob. 10Q

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Explain why a $50,000 increase in inventory during the year must he 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 direct and indirect methods.

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Chapter 12 Solutions

Explain why a $50,000 increase in inventory during the year must he included in computing cash flows from operating activities under both the direct and indirect methods.