ACC 110 Lecture Notes - Cash Flow Statement

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viridianzebra871

6 Oct 2012

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Preparing the cash flows from operating activities section of the cash flow statement. Step 2 add and/or subtract any non-cash items, likely depreciation, and gains and losses. Adjust for changes like the impact of increases or decreases in the balances of a/r, inventory, a/p, etc. ) Step 4 read all provided additional information to ensure you possess all relevant details to move forward and prepare the actual statement calculate proofs (as required) Deduct: sale of capital asset (at historical cost) Add: purchase of new capital asset (at historical cost) Necessary opening and closing balances are obtained from the balance sheet(s) provided. An additional piece of information must also be available to you (either the proceeds from sale or the purchase price) in order to determine the remaining unknown figure. This info will likely be provided in the additional information for the problem. Required opening and closing balances are to be obtained from the balance sheet(s) provided.

Related Questions

E12-12 Inferring Balance Sheet Changes from the Cash FlowStatement (Indirect Method) [LO 12-2]

A statement of cash flows contained the followinginformation:

Operating Activities
Net Income	$	14,013
Depreciation		1,027
Changes in CurrentAssets and Current Liabilities
Accounts Receivable		(2,142	)
Inventory		596
Accounts Payable		6,307
Accrued Liabilities		(1,217	)

Net CashProvided by Operations	$	18,584

Required:

For each of the four current asset and liability accounts listedin the operating activities section of the statement of cash flows,determine whether the following accounts increased or decreasedduring the period:

Kennedy, Inc. reported the following data:

Net income $127,659
Depreciation expense 16,038
Loss on disposal of equipment 11,080
Gain on sale of building 18,917
Increase in accounts receivable 7,995
Decrease in accounts payable 3,476
Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method. Use the minus sign to indicate cash outflows, a decrease in cash, cash payments, or any negative adjustments.

Kennedy, Inc.
Statement of Cash Flow

Cash flows from operating activities:
Net income
$
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation expense

Loss on disposal of equipment

Gain on sale of building

Changes in current operating assets and liabilities:
Increase in accounts receivable

Decrease in accounts payable

Net cash flow from operating activities

jaderaven672

Cash Flows from Operating ActivitiesâIndirect Method
The net income reported on the income statement for the currentyear was $229,700. Depreciation recorded on equipment and abuilding amounted to $68,700 for the year. Balances of the currentasset and current liability accounts at the beginning and end ofthe year are as follows:
End of Year Beginning of Year
Cash $62,940 $67,350
Accounts receivable (net) 79,810 83,110
Inventories 157,350 143,190
Prepaid expenses 8,750 9,500
Accounts payable (merchandise creditors) 70,300 75,160
Salaries payable 10,130 9,360

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a. Prepare the Cash Flows from Operating Activities section of thestatement of cash flows, using the indirect method. Use the minussign to indicate cash out flows, cash payments, decreases in cashand for any adjustments, if required.

Statement of Cash Flows (partial)

Cash flows from operating activities:

$

Adjustments to reconcile net income to net cash flow from operatingactivities:

Changes in current operating assets and liabilities:

Net cash flow from operating activities
$

b. If the direct method had been used, would the net cash flowfrom operating activities have been the same?

crimsoncod794

ACC 110 Lecture Notes - Cash Flow Statement

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