Explanation Operating Activities Section: The activities which accounts for daily operating transactions results in cash inflows as well as outflows are referred to as the operating activities section. The cash flows in the operating activities exists mainly from the production and distribution of commodities produced in an economy. The cash flow statement as per the direct method is given below: L.L. Company Cash Flow Statement – Indirect Method (IFRS) For the year ended December 31 Operating Activities Income before Interest and Taxes $4,800 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Expense (Given) $6,000 Changes in operating working capital accounts: Increase in Accounts Receivable ($2,500) Increase in Inventory ($2,200) Decrease in Accounts Payable ($1,200) Increase in Accrued Expenses 150 Cash from Operating Activities before Financial Items and Tax $5,050 Cash Paid for Interest (Given) ($2,100) Cash Received from Investment Income (Given) $634 Cash Paid for Taxes ($2,284) Net cash provided by operating activities $1,300 Table (1) The table given above depicts various components that help to evaluate the total value of net cash by all the operating activity that is calculated as $1,300. Working Notes: The calculation for Increase in Accounts Receivable is given below: Increase in Accounts Receivable = ( Ending balance − Opening Balance) = $ 5 , 500 − $ 3000 = $ 2 , 500 The calculation for increase in inventory is given below: Increase in <

3rd Edition

ISBN: 9780136946533

Author: GORDON

Publisher: PEARSON

See similar textbooks

Concept explainers

Reporting Cash Flows

Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows fro…

Balance Sheet

A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the …

Financial Statements

Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It…

Owner's Capital

Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expect…

Videos

Question

Chapter 22, Problem 22.7BE

To determine

To prepare: The operating activities section of the cash flow statement using the indirect method.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 22, Problem 22.6BE

Chapter 22, Problem 22.8BE

Students have asked these similar questions

Compute the cost of goods sold for November

What is the number of day's sales in accounts receivable?

Do fast and step by step calculation with explanation for this financial accounting question

Chapter 22 Solutions

INTERMEDIATE ACCOUNTING-MYACCOUNTINGLAB

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

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:9781285595047
Author:Weil
Publisher:Cengage
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning