Statement of cash flows : It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company. Direct method: This method uses the basis of cash for preparing the cash flows statement. Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year. Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable. Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid. Cash flows from operating activities (Direct method) Add: Cash receipts. Cash receipt from customer Less : Cash payments: To supplier For operating expenses Income tax expenses Net cash provided from or used by operating activities The below table shows the way of calculation of cash flows from operating activities: To Determine: The disadvantage of the direct method of reporting cash flows from operating activities.

Question

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Answer 1

Question

Chapter 13, Problem 1DQ

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

Cash flows from operating activities (Direct method)

Add: Cash receipts.
Cash receipt from customer

Less: Cash payments:
To supplier
For operating expenses
Income tax expenses
Net cash provided from or used by operating activities

The below table shows the way of calculation of cash flows from operating activities:

To Determine: The disadvantage of the direct method of reporting cash flows from operating activities.

Expert Solution & Answer

Explanation of Solution

The main disadvantage is that the cash receipts and cash payments data’s might not be readily available in the accounting records.
This method (direct method) not frequently prepared or used in practice.
The required data to calculate operating activities section will be an expensive one and it is a time –consuming process.

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Answer 2

Question

Chapter 13, Problem 1DQ

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

Cash flows from operating activities (Direct method)

Add: Cash receipts.
Cash receipt from customer

Less: Cash payments:
To supplier
For operating expenses
Income tax expenses
Net cash provided from or used by operating activities

The below table shows the way of calculation of cash flows from operating activities:

To Determine: The disadvantage of the direct method of reporting cash flows from operating activities.

Expert Solution & Answer

Explanation of Solution

The main disadvantage is that the cash receipts and cash payments data’s might not be readily available in the accounting records.
This method (direct method) not frequently prepared or used in practice.
The required data to calculate operating activities section will be an expensive one and it is a time –consuming process.

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Answer 3

Question

Chapter 13, Problem 1DQ

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

Cash flows from operating activities (Direct method)

Add: Cash receipts.
Cash receipt from customer

Less: Cash payments:
To supplier
For operating expenses
Income tax expenses
Net cash provided from or used by operating activities

The below table shows the way of calculation of cash flows from operating activities:

To Determine: The disadvantage of the direct method of reporting cash flows from operating activities.

Expert Solution & Answer

Explanation of Solution

The main disadvantage is that the cash receipts and cash payments data’s might not be readily available in the accounting records.
This method (direct method) not frequently prepared or used in practice.
The required data to calculate operating activities section will be an expensive one and it is a time –consuming process.

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Answer 4

Question

Chapter 13, Problem 1DQ

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

Cash flows from operating activities (Direct method)

Add: Cash receipts.
Cash receipt from customer

Less: Cash payments:
To supplier
For operating expenses
Income tax expenses
Net cash provided from or used by operating activities

The below table shows the way of calculation of cash flows from operating activities:

To Determine: The disadvantage of the direct method of reporting cash flows from operating activities.

Expert Solution & Answer

Explanation of Solution

The main disadvantage is that the cash receipts and cash payments data’s might not be readily available in the accounting records.
This method (direct method) not frequently prepared or used in practice.
The required data to calculate operating activities section will be an expensive one and it is a time –consuming process.

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Answer 5

Chapter 13, Problem 1DQ

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

Cash flows from operating activities (Direct method)

Add: Cash receipts.
Cash receipt from customer

Less: Cash payments:
To supplier
For operating expenses
Income tax expenses
Net cash provided from or used by operating activities

The below table shows the way of calculation of cash flows from operating activities:

To Determine: The disadvantage of the direct method of reporting cash flows from operating activities.

Expert Solution & Answer

Explanation of Solution

The main disadvantage is that the cash receipts and cash payments data’s might not be readily available in the accounting records.
This method (direct method) not frequently prepared or used in practice.
The required data to calculate operating activities section will be an expensive one and it is a time –consuming process.

Answer 6

Chapter 13, Problem 1DQ

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

Cash flows from operating activities (Direct method)

Add: Cash receipts.
Cash receipt from customer

Less: Cash payments:
To supplier
For operating expenses
Income tax expenses
Net cash provided from or used by operating activities

The below table shows the way of calculation of cash flows from operating activities:

To Determine: The disadvantage of the direct method of reporting cash flows from operating activities.

Expert Solution & Answer

Explanation of Solution

The main disadvantage is that the cash receipts and cash payments data’s might not be readily available in the accounting records.
This method (direct method) not frequently prepared or used in practice.
The required data to calculate operating activities section will be an expensive one and it is a time –consuming process.

Answer 7

Chapter 13, Problem 1DQ

To determine

Statement of cash flows: It is one of the financial statement that shows the cash and cash equivalents of a company for a particular period. It determines the net changes in cash through reporting the sources and uses of cash due to the operating, investing, and financing activities of a company.

Direct method: This method uses the basis of cash for preparing the cash flows statement.

Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company. In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.

Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

Cash flows from operating activities (Direct method)

Add: Cash receipts.
Cash receipt from customer

Less: Cash payments:
To supplier
For operating expenses
Income tax expenses
Net cash provided from or used by operating activities

The below table shows the way of calculation of cash flows from operating activities:

To Determine: The disadvantage of the direct method of reporting cash flows from operating activities.

Answer 8

Expert Solution & Answer

Explanation of Solution

The main disadvantage is that the cash receipts and cash payments data’s might not be readily available in the accounting records.
This method (direct method) not frequently prepared or used in practice.
The required data to calculate operating activities section will be an expensive one and it is a time –consuming process.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 13 - Prob. 1DQ Ch. 13 - Prob. 2DQ Ch. 13 - A corporation issued 2,000,000 of common stock in...Ch. 13 - A retail business, using the accrual method of...Ch. 13 - If salaries payable was 100,000 at the beginning...Ch. 13 - Prob. 6DQ Ch. 13 - A corporation issued 2,000,000 of 20-year bonds...Ch. 13 - Fully depreciated equipment costing 50,000 was...Ch. 13 - Prob. 9DQ Ch. 13 - Name five common major classes of operating cash...

Explanation of Solution

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