Explanation Cash Flow Statement: It is a financial statement which gives information about company’s cash inflows and outflows during an accounting year. It tells the cash position of the company and shows from where company generates its cash and how it is used in the business. Direct method: It refers to preparation of cash flow statement by converting the accrual basis into cash basis by adjusting each line item as indirect method This method ignore the items like, depreciation and amortization as it includes only cash transaction. Indirect method: This method is easy as it starts with net profit and makes necessary adjustment by converting accrual basis into cash basis. Firms make adjustment by adding back all the non-cash expenses like depreciation, provision for losses on accounts receivable and similarly reduce non cash revenues and gains from the net profit. Statement I: This statement explains that income statement is based on accrual accounting method whereas cash flow is based on cash basis...

Intermediate Accounting - Myaccountinglab - Pearson Etext Access Card Student Value Edition

1st Edition

ISBN: 9780134047430

Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

Publisher: PEARSON

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Indiana Corporation products a single product that it sells for $9 per unit. During the first year of operations, 100,000 units were produced, and 90,000 units were sold. Manufacturing costs and selling and administrative expenses for the year were as follows: Raw materials Direct labor Factory overhead Fixed Costs Variable Costs $1.75 per unit produced $1.25 per unit produced $1,00,000 $0.50 per unit produced Selling and administrative $ 70,000 $0.60 per unit sold What was Indiana Corporation's net operating income for the year using variable costing? A. $371,000 B. $281,000 C. $271,000 D. $181,000

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Intermediate Accounting - Myaccountinglab - Pearson Etext Access Card Student Value Edition

Ch. 22 - Prob. 22.1Q Ch. 22 - Prob. 22.2Q Ch. 22 - Prob. 22.3Q Ch. 22 - Prob. 22.4Q Ch. 22 - Prob. 22.5Q Ch. 22 - How do firms reclassify gains and losses on the...Ch. 22 - Prob. 22.7Q Ch. 22 - Prob. 22.8Q Ch. 22 - Prob. 22.9Q Ch. 22 - Prob. 22.10Q

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