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: 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. The below table shows the way of calculation of cash flows from operating activities: 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 To Compute : The cash collections from customers.

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Chapter 14, Problem 14.29E

1.

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: 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.

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

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

To Compute: The cash collections from customers.

2.

To determine

To Compute: The amount of cash payment for merchandise inventory.

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In a brief essay format, explain the importance of a post-closing trial balance in the accounting process. Purpose: Explain why a post-closing trial balance is prepared and what specific purposes it serves in financial accounting. Timing: Describe when in the accounting cycle a post-closing trial balance is typically prepared and why this timing is essential. Content: Discuss the types of accounts that appear on a post-closing trial balance and why certain accounts are included while others are excluded. Comparison: Explain how a post-closing trial balance differs from a regular trial balance and what additional information it provides to a business.

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