Accounting (Text Only)
26th Edition
ISBN: 9781285743615
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 16, Problem 16.4EX
To determine
Statement of
Indirect method: Under this method, the following amounts are to be adjusted from the Net Income to calculate the net cash provided from operating activities.
To Indicate: Whether each of the given items would be added or deducted from net income in determining net cash flow from operating activities (indirect method).
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Students have asked these similar questions
Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?
a.a decrease in accounts payable
b.an increase in inventory
c.preferred dividends declared and paid
d.a decrease in accounts receivable
Which of the following should be deducted from net income in computing net cash flows from operating activities using the indirect method?
a.a decrease in accounts receivable
b.preferred dividends declared and paid
c.a decrease in accounts payable
d.a decrease in inventory
Which of the following should be added to net income in calculating net cash flow from operating activities using the INDIRECT method?
A. A decrease in accounts payable.
B. A decrease in accounts receivable.
C. Preferred dividends declared and paid.
D. An increase in inventory.
Chapter 16 Solutions
Accounting (Text Only)
Ch. 16 - What is the principal disadvantage of the direct...Ch. 16 - Prob. 2DQCh. 16 - A corporation issued 2,000,000 of common stock in...Ch. 16 - A retail business, using the accrual method of...Ch. 16 - Prob. 5DQCh. 16 - A long-term investment in bonds with a cost of...Ch. 16 - A corporation issued 2,000,000 of 20-year bonds...Ch. 16 - Fully depreciated equipment costing 50,000 is...Ch. 16 - Prob. 9DQCh. 16 - Name five common major classes of operating cash...
Ch. 16 - Prob. 16.1APECh. 16 - Classifying cash flows Identify whether each of...Ch. 16 - Prob. 16.2APECh. 16 - Prob. 16.2BPECh. 16 - Changes in current operating assets and...Ch. 16 - Changes in current operating assets and...Ch. 16 - Prob. 16.4APECh. 16 - Prob. 16.4BPECh. 16 - Prob. 16.5APECh. 16 - Land transactions on the statement of cash flows...Ch. 16 - Prob. 16.6APECh. 16 - Prob. 16.6BPECh. 16 - Cash payments for merchandisedirect method The...Ch. 16 - Cash payments for merchandisedirect method The...Ch. 16 - Free cash flow McMahon Inc. reported the following...Ch. 16 - Prob. 16.8BPECh. 16 - Prob. 16.1EXCh. 16 - Effect of transactions on cash flows State the...Ch. 16 - Prob. 16.3EXCh. 16 - Prob. 16.4EXCh. 16 - Cash flows from operating activities-indirect...Ch. 16 - Prob. 16.6EXCh. 16 - Prob. 16.7EXCh. 16 - Determining cash payments to stockholders The...Ch. 16 - Reporting changes in equipment on statement of...Ch. 16 - Prob. 16.10EXCh. 16 - Reporting land transactions on statement of cash...Ch. 16 - Prob. 16.12EXCh. 16 - Reporting land acquisition for cash and mortgage...Ch. 16 - Reporting issuance and retirement of longterm debt...Ch. 16 - Prob. 16.15EXCh. 16 - Prob. 16.16EXCh. 16 - Prob. 16.17EXCh. 16 - Prob. 16.18EXCh. 16 - Prob. 16.19EXCh. 16 - Prob. 16.20EXCh. 16 - Prob. 16.21EXCh. 16 - Prob. 16.22EXCh. 16 - Cash flows from operating activitiesdirect method....Ch. 16 - Prob. 16.24EXCh. 16 - Free cash flow The financial statement for Nike,...Ch. 16 - Free cash flow Lovato Motors Inc. has cash flows...Ch. 16 - Prob. 16.1APRCh. 16 - Statement of cash flowsindirect method The...Ch. 16 - Prob. 16.3APRCh. 16 - Statement of cash flows-direct method The...Ch. 16 - Prob. 16.5APRCh. 16 - Prob. 16.1BPRCh. 16 - Statement of cash flowsindirect method The...Ch. 16 - Prob. 16.3BPRCh. 16 - Statement of cash flows-direct method The...Ch. 16 - Prob. 16.5BPRCh. 16 - Ethics in Action Lucas Hunter, president of...Ch. 16 - Using the statement of cash flows You are...Ch. 16 - Dillip Lachgar is the president and majority...Ch. 16 - Prob. 16.4CP
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- Financial data for Otto Company follow: a. Compute the ratio of cash to monthly cash expenses. b. Interpret the results computed in (a).arrow_forwardWhat are two ways to report a companys net cash flow from operating activities? Briefly describe each method.arrow_forwardAn increase in inventories is deducted from net income to arrive at operating cash flow because a. cash payments to customers were larger than the purchases made during the period. b. purchases are larger than the cost of goods sold by the amount that inventories increased. c. cash payments to customers were less than the purchases made during the period. d. purchases are less than the cost of goods sold by the amount that inventories increased. e. All of these.arrow_forward
- Preparing a Statement of Cash Flows Volusia Company reported the following comparative balance sheets for 2019: Required: Prepare a statement of cash flows for Volusia using the indirect method to compute net cash flow from operating activities.arrow_forwardThe IRR method assumes that cash flows are reinvested at _________. A. the internal rate of return B. the companys discount rate C. the lower of the companys discount rate or Internal rate of return D. an average of the internal rate of return and the discount ratearrow_forwardIn computing the periods net operating cash flows, why are increases in current liabilities and decreases in current assets added back to net income?arrow_forward
- Classification of Cash Flows The following are several items that might be disclosed on a companys statement of cash flows presented using the indirect method. a. Net income b. Depreciation expense c. Issuance of common stock d. Loss on disposal of equipment e. Purchase of a building f. Decrease in accounts payable g. Converted bonds into common stock h. Sale of long-term investment i. Payment of interest j. Increase in inventory Required: 1. Indicate whether each item should be classified as a cash flow from operating activities, cash flow from investing activities, cash flow from financing activities, or noncash investing and financing activity. 2. CONCEPTUAL CONNECTION Why is the proper classification of cash flows important?arrow_forwardIndicate whether each item should be added to or subtracted from net income to arrive at the net cash flow from operating activities. a. Increase in inventory b. Amortization of discount on investment in bonds c. Decrease in accounts payable d. Amortization of discount on bonds payable e. Increase in salaries payable f. Increase in prepaid expenses g. Subsidiary loss under the equity method h. Gain on disposal of equipment i. Decrease in accounts receivable j. Increase in deferred tax liabilityarrow_forwardIn preparing a cash flow statement which of the following is a cash inflow? A. Issue of DebenturesB. Redemption of DebenturesC. Increase in trade ReceivablesD. Decrease in trade payablearrow_forward
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