Describe the methodology, similarities, and the differences between thedirect and indirect methods of preparing the statement of cash flows Besure to explain the major cash flow categories of operating, investing, andfinancing activities, and provide at least two examples of each activity.Then, describe the relationship between the beginning cash balance andthe ending cash balance for the current period. Lastly, explain the reasonswhy one method (direct or indirect) is most often used by corporations toreport cash flows.

The statement of cash flows is a crucial financial statement that provides insights into a company's…

Answered: Describe the methodology, similarities,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

Which of the following is a specific objective of financial reporting? a. provide information that is useful to investors in making investment decisions b. provide information useful in assessing the amounts, timing, and uncertainty of prospective cash receipts c. provide information useful in assessing the amounts, timing, and uncertainty of prospective cash inflows d. provide information about a company's resources and the claims against the company
Give any three types of examples in each of operating activities, financing activities and investing activities as per cash flow statements.
1. Which of the following statements is CORRECT regarding the presentation of the statement of cash flows? a. Investing activities may be presented using the direct or indirect method. b. Financing activities shall be presented using the indirect method only. c. Operating activities may be presented using direct or the indirect method. d. Operating activities shall be presented using the direct method only. --- 2. Generally, dividends are presented as cash outflows from financing activities a. When declared b. When paid c. When recorded in the stock register d. When declared or recorded, whichever comes first
Net corporate cash flow is a metric created by cash-basis accounting. Explain the metric in detail.
3. Provide at least one example of an account reported in the balance sheet that would be classified as (a) an operating activity, (b) an investing activity, and (c) a financing activity. The format of financial statements varies from country to country. The FASB and IASB propose that financial statements in the future be organized using the same format currently used in the statement of cash flows-operating, investing, and financing activities. This would greatly change the current format used to prepare the income statement and the balance sheet.
Using the following answer keys, you are to identify in which activity each of the transactions is classified and its effect on cash flows. Cash Flow Classification.using the capital letter only: . .Operating Activity • L.Investing Activity • F..Financing Activity • OL.Operating and Investing Activity • N.Noncash Transaction Effect on Cash Flows.using the capital letter only: • .Increase • D.Decrease N.No Effect Transaction Cash Flow Classification Effect on Cash Flows Paid a cash dividend. Decreased accounts receivable. Increased inventory. Retired long-term debt with cash. Sold long-term securities at a loss. Issued stock for equipment. Decreased prepaid insurance. Purchased treasury stock with cash. Retired a fully depreciated truck (no gain or loss). Transferred cash to money market account.
In the context of financial accounting, what is the primary purpose of the statement of cash flows? A) To provide information about a company's economic resources and claims against those resources. B) To report the financial position of a company at a specific point in time. C) To disclose changes in equity during a specific period. D) To present the cash inflows and outflows of a company's operating, investing, and financing activities during a specific period.
Please explain how to prepare a statement of cash flows (indirect method) including analyzing tables? Please provide an example. Thank you,
To make the assessment about future net cash in-flows. The users’ needs to select which type of information ? a. Changes in the resources and claims b. Bank accounts of the company c. Age of the management d. Property of the company
IT MUST BE ACCURATE AND COMPLETE EXPLANATION Discuss the computation of Operating Cash Flow using the indirect method. Explain why do we add or deduct items or transactions.
Select the item that matches with the description. Descriptions a. Begins with net income and then lists adjustments to net income in order to arrive at operating cash flows. b. Item included in net income, but excluded from net operating cash flows. c. Net cash flows from operating activities divided by average total assets. d. Cash transactions involving lenders and investors. e. Cash transactions involving net income. f. Cash transactions for the purchase and sale of long-term assets. g. Purchase of long-term assets by issuing stock to seller. h. Shows the cash inflows and outflows from operations such as cash received from customers and cash paid for inventory, salaries, rent, interest, and taxes. Terms
Which of the following is not a use of the statement of cash flows? a.Helps creditors analyze the company's operations. b.Provides information about the sources of cash flows. c.Measures how efficiently the company's cash resources are being used. d.Provides insights into the quality and reliability of reported income.

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