FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Suppose your company sells services of $260 in exchange for $175 cash and $85 on account.
How would i do the following questions?
- Calculate the amount that should be reported as net
cash flow from operating activities. - Calculate the amount that should be reported as net income.
- Show how the indirect method would convert net income (requirement 3) to net cash flow from operating activities (requirement 2).
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- Consider the following: Net Income Depreciation Expense Gain on Sale of Land Increase in Inventory Increase in Wages Payable Payment of Dividends Calculate the net cash provided (or used) by operating activities using the indirect method. Select one: O O O O $51,900 36,000 22,500 6,150 18,450 6,000 A. $38,100 B. $77,700 C. $107,700 D. $71,700arrow_forwardWhich of the following is NOT true? Accrual accounting requires expenses to be recorded when they are incurred, whether or not they have been paid. O Unearned revenue is a liability before it is earned. Interest paid is a financing cash outflow on the statement of cash flows. O The gain on the sale of land is determined by subtracting the original cost of the land from the cash received on the sale. Depreciation expense is never a cash outflow.arrow_forwardAny gain or loss from the sale of equipment is reported in the operating activities section of the statement of cash flows. True Falsearrow_forward
- The following schedule relates the income statement with cash flows from operating activities, derived by both the direct and indirect methods. Some elements necessary to complete the schedule are missing. Required: Complete the schedule by determining each of the following missing elements: (Amounts to be deducted should be indicated with a minus sign.) Income Statement Sales Gain on sale of equipment Cost of goods sold Salaries expense Depreciation expense Interest expense Insurance expense Loss on sale of land Income tax expense Net Income Cash flows from Operating Activities Indirect Method Net income Adjustments: $432 Decrease in accounts receivable 36 Gain on sale of equipment Increase in inventory Increase in accounts payable (66) (21) Depreciation expense Decrease in bond discount (45) Decrease in prepaid insurance (18) Loss on sale of land (51) Increase in income tax payable Net cash flows from operating activities Direct Method 18 Cash received from customers (36) (Not…arrow_forwardAssume that the expected value method determines a transaction price of $60,000 and most likely amount method determines a transaction price of $50,000. What effect will recording revenue based on the expected value method have relative to the most likely amount method? A.)Revenue will be higher and expenses will be higher B.) Revenue will be higher and expenses are unaffected C.) Revenue will be lower and expenses will be lower D.) Revenue will be lower and expenses are unaffected E.) Revenue and expenses will be the samearrow_forwardPlease see below. I really need help with this asap. Please include relevant terms and dates as needed.arrow_forward
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