Problem 11-8A (Algo) Prepare an income statement using operating cash flow information-indirect anddirect methods (LO11-3, 11-7)Cash flows from operating activities for both the indirect and direct methods are presented for Reverse Logic. Allamounts are in thousands (000s).Cash Flows from Operating Activities (Indirect method)Net incomeAdjustments to reconcile net income to net cash flows from operatingactivities:Depreciation expenseIncrease in accounts receivableDecrease in inventoryIncrease in prepaid rentDecrease in accounts payableDecrease in income tax payableNet cash flows from operating activitiesCash Flows from Operating Activities (Direct method)Cash received from customersCash paid to suppliersCash paid for operating expensesCash paid for income taxesNet cash flows from operating activitiesREVERSE LOGICIncome StatementFor the Year Ended December 31, 2024Net salesExpenses:Cost of goods soldOperating expensesDepreciationexpenseIncome tax expenseTotal expensesNet incomeRequired:Complete the following income statement for Reverse Logic. Assume all accounts payable are to suppliers. (Enter youranswers in thousands (i.e., 10,000,000 should be entered as "10,000).)57$$16916957(33)45(3)(21)(7)$4,045(2,590)(1,156)(92)$207$207

1. Cash Flow Statement reflects the Cash Inflows and Outflows during a period of time. 2. Effects of…

nts are in thousands (000s). h Flows from Operating Activities (Indirect method) -t income justments to reconcile net income to net cash flows from tivities: preciation expense crease in accounts receivable crease in inventory crease in prepaid rent crease in accounts payable crease in income tax payable let cash flows from operating activities

nts are in thousands (000s). h Flows from Operating Activities (Indirect method) -t income justments to reconcile net income to net cash flows from tivities: preciation expense crease in accounts receivable crease in inventory crease in prepaid rent crease in accounts payable crease in income tax payable let cash flows from operating activities

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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Cash Flows from (Used for) Operating Activities The net income reported on the income statement for the current year was $73,600. Depreciation recorded on store equipment for the year amounted to $27,400. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: Cash Accounts receivable (net) Merchandise inventory Prepaid expenses Accounts payable (merchandise creditors) Wages payable End of Year $23,500 56,000 35,500 4,750 21,800 4,900 Beginning of Year $18,700 48,000 40,000 7,000 16,800 5,800 a. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash
Which of the following would be subtracted from net income when using the indirect method to derive net cash from operating activities? a. Decrease in accounts payable b. Loss on sale of investments c. Decrease in accounts receivable d. Depreciation expense
In a statement of cash flows using indirect method, an increase ininventory is A. deducted from Net IncomeB. reported as an outflow of cashC. added to net incomeD. no effect on cash flows
Why is it necessary to convert profits (as determined in the income Statement) to cash nows?
When using the Indirect Method of preparing the Statement of Cash Flows, in the operating section, some accounts are added and some costs are subtracted. If you had to explain to someone why an increase in accounts receivable is subtracted and the opposite as to why a decrease In accounts recelvable is added, what information would you relay to them? (Include in your response the concept of accruals, FASB guidelines, sales and net income on the income statement, and the balance sheet). Answer should be in a paragraph form.
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.
a. Prepare the Cash Flows from (used for) Operating Activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments. Statement of Cash Flows (partial) Cash flows from (used for) operating activities: Net income ✓ Adjustments to reconcile net income to net cash flows from (used for) operating activities: Depreciation expense ✓ ✓ Gain on disposal of equipment ✓ Changes in current operating assets and liabilities: Increase in accounts receivable Decrease in inventory Decrease in prepaid insurance Decrease in accounts payable Increase in income taxes payable Net cash flows from operating activities Feedback 00 00000
View previous at Required information Assume a company prepares the statement of cash flows using the indirect method. The company purchases its Inventory on credit from suppliers. How should a decrease in accounts payable be reflected In the section that reconciles net income to cash flow from operating activitles? Multiple Choice It would be added if the section starts with net income and subtracted if it starts with a net loss It would be added in reconciling net income to cash flow from operafing activities It would be subtracted in reconciling net income to cash flow from operating activities A change in accounts payable does not affect the reconciliation of net income to cash flow from operating activities < Prev 15 of 15 Next Form 1040Sch...pdf 6 Form1040 Sch...pdf B1040 Sohedul...pdf Form8829 (1).pdf MacBook Air
Help with part "a" please!
Provide iand Create nformation needed to create a Statement of Cash Flows using the Indirect Method. You MUST include: Net Income At least 3 items that go under operating activities. At least 2 items that go under investing activities. At least 2 items that go under financing activities. And 1 non-cash transaction.
Which of the cash flows would be classified as cash flows from operating activities? i) Cash received from fees earnedii) Cash paid for repayment of loaniii) Cash received from sale of landiv) Cash paid to suppliersv) Cash paid for marketing expenses Options i, ii and ii, Options ii, iv and iii Options v, iv and iii Options i, iv and v
Match each of the following term with the corresponding description. Not all descriptions will be used._____ Operating activities_____ Indirect method_____ Cash equivalent_____ Investing activities_____ Direct method_____ Financing activitiesA. Measures the percent of net income that comes from high-margin products.B. Includes such events as the receipt of dividends and interest on investment assets.C. Includes assets that are very liquid and have original maturities of three months or less.D. The percent of total debt represented by a company's cash account.E. These activities include only purchases made with borrowed funds.F. Where cash flows from operating activities are calculated by converting each revenue and expense item from an accrual to a cash basis.G. This ratio multiplies net income by the average rate of interest the company receives on its investments.H. This ratio uses net income instead of operating cash flow to Analysis a company's ability to finance the cost of its…