
Statement of
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.
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.
To Determine: Effect of change in the method of statement of cash flows

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Chapter 13 Solutions
Corporate Financial Accounting
- A company purchases under terms of 1.5/10, net 30, meaning they receive a 1.5% discount if they pay within 10 days but must pay the full amount within 30 days. If the company decides to delay payment for an additional 15 days (total 45 days) without penalty, what is the effective annual cost of trade credit? Assume 365 days in a year, and round to two decimal places.arrow_forwardManagerial accountingarrow_forwardNova Enterprises has total liabilities of $750,000 and total equity of $500,000. What is its debt-to-equity ratio? a. 1.5 b. 0.67 c. 1.25 d. 1.0arrow_forward
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