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. Indirect method: Under this method, the following amounts are to be adjusted from the Net Incometo calculate the net cash provided from operating activities . Cash flows from operating activities: These are the cash produced by the normal business operations. The below table shows the way of calculation of cash flows from operating activities: Cash flows from operating activities (Indirect method) Add: Decrease in current assets Increase in current liability Depreciation expense and amortization expense Loss on sale of plant assets Deduct: Increase in current assets Decrease in current liabilities Gain on sale of plant assets Net cash provided from or used by operating activities Table (1) To Compute: Net cash flows from operating activities under indirect method.

Question

Quick answer of this accounting questions

Answer 1

Question

Chapter 13, Problem 2BE

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.

Indirect method: Under this method, the following amounts are to be adjusted from the Net Incometo calculate the net cash provided from operating activities.

Cash flows from operating activities: These are the cash produced by the normal business operations.

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

Cash flows from operating activities (Indirect method)

Add: Decrease in current assets
         Increase in current liability
         Depreciation expense and amortization expense
         Loss on sale of plant assets

Deduct: Increase in current assets
             Decrease in current liabilities
             Gain on sale of plant assets
Net cash provided from or used by operating activities

Table (1)

To Compute: Net cash flows from operating activities under indirect method.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Students have asked these similar questions

Quick answer of this accounting questions

Please give me answer general accounting question

respond to ceasar Companies make adjusting entries to ensure that their financial statements accurately reflect the true financial position and performance during a specific accounting period. These entries are necessary to account for revenues earned and expenses incurred that may not yet have been recorded in the books. Adjusting entries are typically made at the end of an accounting period, during the preparation of financial statements, as part of the accounting cycle. This step is crucial in aligning the company’s books with the accrual basis of accounting, where revenues and expenses are recognized when they are earned or incurred, rather than when cash is received or paid. By making these adjustments, companies can provide accurate and reliable financial information to stakeholders.