Chapter 4, Problem 1AFKC

1.

To determine

Financial statement: Financial statements are condensed summary of transactions communicated in the form of reports for the purpose of decision making. The financial statements reports, and shows the financial status of the business. The financial statements consist of the balance sheet, income statement, statement of retained earnings, and the cash flow statement.

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Statement of Cash Flows: The statement of cash flows is one of the financial statements, provides information about cash inflows and cash outflows of an enterprise’s operating, investing, and financing activities that occurred during the period.

To identify: How Company AF classifies operating expenses in its income statement.

2.

To determine

To identify: How Company AF classifies interest paid, interest received, and dividends received in its statement of cash flows.