(a) Introduction: Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows. To report: The amount related to inventory that is deducted by each company on the income statement.

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 12, Problem 14E

To determine

(a)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The amount related to inventory that is deducted by each company on the income statement.

To determine

(b)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The amount spent by the company related to inventory purchased with cash and on account.

To determine

(c)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The difference between cost of goods sold and total cash paid for inventory.

To determine

(d)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The changes in company’s inventory and accounts payable.

To determine

(e)

Introduction:

The indirect method helps the company to convert accrual basis of accounting to cash basis by adjusting the net income. It can be done by adding back non-cash expenses such as depreciation on fixed asset, amortization, bad debts written off and any losses on the sale of a fixed asset and by subtracting net income such as profit from sale of asset, dividend received.

To report:

The amount that needs to be added or deducted from net income under indirect method.

To determine

(f)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To state:

If there is any resemblance between requirement 3 and 5 with reason.

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Hamburger Heaven's income statement for the current year and selected balance sheet data for the current and prior years ended December 31 are presented below. Income Statement $2,280 Sales Revenue Expenses: Cost of Goods Sold 950 Depreciation Expense Salaries and Wages Expense 250 550 Rent Expense 300 Insurance Expense 85 Interest Expense Utilities Expense 65 55 Net Income 25 Selected Balance Sheet Accounts Prior Year Current Year Inventory 92 65 405 500 Accounts Receivable Accounts Payable Salaries/Wages Payable Utilities Payable Prepaid Rent Prepaid Insurance 225 260 39 25 25 70 4 11 13 TIP: Prepaid Rent decreased because the amount taken out of Prepaid Rent (and subtracted from net income as Rent Expense) was more than the amount paid for rent in cash during the current year. Required: Prepare the cash flows from operating activities section of the statement of cash flows using the direct method. TIP: Convert the cost of goods sold to cash paid to suppliers by adding the increase…

Which of the following balance sheet items are commonly associated with the purchases and cash disbursements cycle? A Inventory and accounts payable B Purchases and accounts receivable C Cash paid to vendors D Cash received from the sale of inventory

Classifying items on the statement of cash flows Cash flow items must be categorized into one of four categories. Identify each item as operating (O), investing (I), financing (F), or non-cash (N). a. Cash purchase of merchandise inventory b. Cash payment of dividends c. Cash receipt from the collection of long-term notes receivable d. Cash payment for income taxes e. Purchase of equipment in exchange for notes payable f. Cash receipt from the sale of land g. Cash received from borrowing money h. Cash receipt for interest income i. Cash receipt from the issuance of common stock j. Cash payment of salaries

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 12, Problem 14E

To determine

(a)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The amount related to inventory that is deducted by each company on the income statement.

To determine

(b)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The amount spent by the company related to inventory purchased with cash and on account.

To determine

(c)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The difference between cost of goods sold and total cash paid for inventory.

To determine

(d)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The changes in company’s inventory and accounts payable.

To determine

(e)

Introduction:

The indirect method helps the company to convert accrual basis of accounting to cash basis by adjusting the net income. It can be done by adding back non-cash expenses such as depreciation on fixed asset, amortization, bad debts written off and any losses on the sale of a fixed asset and by subtracting net income such as profit from sale of asset, dividend received.

To report:

The amount that needs to be added or deducted from net income under indirect method.

To determine

(f)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To state:

If there is any resemblance between requirement 3 and 5 with reason.

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 12, Problem 14E

To determine

(a)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The amount related to inventory that is deducted by each company on the income statement.

To determine

(b)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The amount spent by the company related to inventory purchased with cash and on account.

To determine

(c)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The difference between cost of goods sold and total cash paid for inventory.

To determine

(d)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The changes in company’s inventory and accounts payable.

To determine

(e)

Introduction:

The indirect method helps the company to convert accrual basis of accounting to cash basis by adjusting the net income. It can be done by adding back non-cash expenses such as depreciation on fixed asset, amortization, bad debts written off and any losses on the sale of a fixed asset and by subtracting net income such as profit from sale of asset, dividend received.

To report:

The amount that needs to be added or deducted from net income under indirect method.

To determine

(f)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To state:

If there is any resemblance between requirement 3 and 5 with reason.

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 12, Problem 14E

To determine

(a)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The amount related to inventory that is deducted by each company on the income statement.

To determine

(b)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The amount spent by the company related to inventory purchased with cash and on account.

To determine

(c)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The difference between cost of goods sold and total cash paid for inventory.

To determine

(d)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The changes in company’s inventory and accounts payable.

To determine

(e)

Introduction:

The indirect method helps the company to convert accrual basis of accounting to cash basis by adjusting the net income. It can be done by adding back non-cash expenses such as depreciation on fixed asset, amortization, bad debts written off and any losses on the sale of a fixed asset and by subtracting net income such as profit from sale of asset, dividend received.

To report:

The amount that needs to be added or deducted from net income under indirect method.

To determine

(f)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To state:

If there is any resemblance between requirement 3 and 5 with reason.

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Answer 5

Chapter 12, Problem 14E

To determine

(a)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The amount related to inventory that is deducted by each company on the income statement.

To determine

(b)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The amount spent by the company related to inventory purchased with cash and on account.

To determine

(c)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The difference between cost of goods sold and total cash paid for inventory.

To determine

(d)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The changes in company’s inventory and accounts payable.

To determine

(e)

Introduction:

The indirect method helps the company to convert accrual basis of accounting to cash basis by adjusting the net income. It can be done by adding back non-cash expenses such as depreciation on fixed asset, amortization, bad debts written off and any losses on the sale of a fixed asset and by subtracting net income such as profit from sale of asset, dividend received.

To report:

The amount that needs to be added or deducted from net income under indirect method.

To determine

(f)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To state:

If there is any resemblance between requirement 3 and 5 with reason.

Answer 6

Chapter 12, Problem 14E

To determine

(a)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The amount related to inventory that is deducted by each company on the income statement.

Answer 7

Chapter 12, Problem 14E

To determine

(a)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The amount related to inventory that is deducted by each company on the income statement.

Answer 8

To determine

(b)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The amount spent by the company related to inventory purchased with cash and on account.

Answer 9

To determine

(b)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The amount spent by the company related to inventory purchased with cash and on account.

Answer 10

To determine

(c)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The difference between cost of goods sold and total cash paid for inventory.

Answer 11

To determine

(c)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The difference between cost of goods sold and total cash paid for inventory.

Answer 12

To determine

(d)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The changes in company’s inventory and accounts payable.

Answer 13

To determine

(d)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To report:

The changes in company’s inventory and accounts payable.

Answer 14

To determine

(e)

Introduction:

The indirect method helps the company to convert accrual basis of accounting to cash basis by adjusting the net income. It can be done by adding back non-cash expenses such as depreciation on fixed asset, amortization, bad debts written off and any losses on the sale of a fixed asset and by subtracting net income such as profit from sale of asset, dividend received.

To report:

The amount that needs to be added or deducted from net income under indirect method.

Answer 15

To determine

(e)

Introduction:

The indirect method helps the company to convert accrual basis of accounting to cash basis by adjusting the net income. It can be done by adding back non-cash expenses such as depreciation on fixed asset, amortization, bad debts written off and any losses on the sale of a fixed asset and by subtracting net income such as profit from sale of asset, dividend received.

To report:

The amount that needs to be added or deducted from net income under indirect method.

Answer 16

To determine

(f)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To state:

If there is any resemblance between requirement 3 and 5 with reason.

Answer 17

To determine

(f)

Introduction:

Statements of cash flows are the statements that help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents. Operating activities, investing activities and financing activities are the three activities reported on the statement of cash flows.

To state:

If there is any resemblance between requirement 3 and 5 with reason.

Answer 18

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Answer 19

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Answer 20

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Answer 21

Ch. 12 - Compare the purposes of the income statement, the...Ch. 12 - What information does the statement of cash flows...Ch. 12 - Prob. 3Q Ch. 12 - What are the major categories of business...Ch. 12 - Prob. 5Q Ch. 12 - Prob. 6Q Ch. 12 - Prob. 7Q Ch. 12 - Prob. 8Q Ch. 12 - Prob. 9Q Ch. 12 - Prob. 10Q

Solution Summary: The author explains that statements of cash flows help in determining how the changes in balance sheet and income statement affect the cash and cash equivalents.

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Chapter 12 Solutions