Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Chapter 22, Problem 22.18BE
To determine
To prepare: The operating activities section of the
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Classifying items on the indirect statement of cash flows
The statement of cash flows categorizes like transactions for optimal reporting. Identify each item as a(n):
Operating activity—addition to net income (O+) or subtraction from net income (O–)
Investing activity—cash inflow (I+) or cash outflow (I–)
Financing activity—cash inflow (F+) or cash outflow (F–)
Non-cash investing and financing activity (NIF)
Activity that is not used to prepare the indirect statement of cash flows (N)
The indirect method is used to report cash flows from operating activities.
Loss on sale of land.
Acquisition of equipment by the issuance of note payable.
Payment of long-term debt.
Acquisition of building by the issuance of common stock.
Increase in Salaries Payable.
The decrease in Merchandise Inventory.
Increase in Prepaid Expenses.
The decrease in Accrued Liabilities.
Cash sale of land.
Issuance of long-term note payable to borrow cash.
Depreciation Expense.
Purchase of treasury stock.
Issuance of…
Classifying items on the indirect statement of cash flows
The statement of cash flows categorizes like transactions for optimal reporting. Identify each item as a(n):
• Operating activity—addition to net income (O+) or subtraction from net income (O–)
• Investing activity—cash inflow (I+) or cash outflow (I–)
• Financing activity—cash inflow (F+) or cash outflow (F–)
• Non-cash investing and financing activity (NIF)
• Activity that is not used to prepare the indirect statement of cash flows (N)
The indirect method is used to report cash flows from operating activities.
a. Loss on sale of land.
b. Acquisition of equipment by issuance of note payable.
c. Payment of long-term debt.
d. Acquisition of building by issuance of common stock.
e. Increase in Salaries Payable.
f. Decrease in Merchandise Inventory.
g. Increase in Prepaid Expenses.
h. Decrease in Accrued Liabilities.
i. Cash sale of land.
j. Issuance of long-term note payable to borrow cash.
k. Depreciation Expense.
l. Purchase of…
The accounting records of Rockness Company provided the data below ($ in 000s).
Net income
Depreciation expense
Decrease in accounts receivable
Increase in inventory
Increase in prepaid insurance
Increase in salaries payable
Decrease in interest payable
$ 24,600
2, 700
1, 400
3,900
240
740
340
Required:
Prepare a reconciliation of net income to net cash flows from operațing activities. (Amounts to be deducted should be indicated with
a minus sign. Enter your answers in thousands )
Cash flows from operating activities:
let income
Adjustments for noncash effects:
Changes in operating assels and liabilities.
Chapter 22 Solutions
Intermediate Accounting
Ch. 22 - Prob. 22.1QCh. 22 - Prob. 22.2QCh. 22 - Prob. 22.3QCh. 22 - Prob. 22.4QCh. 22 - Prob. 22.5QCh. 22 - How do firms reclassify gains and losses on the...Ch. 22 - Prob. 22.7QCh. 22 - Prob. 22.8QCh. 22 - Prob. 22.9QCh. 22 - Prob. 22.10Q
Ch. 22 - Prob. 22.11QCh. 22 - What approach is used in preparing the operating...Ch. 22 - Under the indirect method, do firms subtract bond...Ch. 22 - Do firms subtract pension expense from net income...Ch. 22 - Prob. 22.15QCh. 22 - Prob. 22.16QCh. 22 - Prob. 22.1MCCh. 22 - Prob. 22.2MCCh. 22 - Big Dollars Corporation's comparative financial...Ch. 22 - Prob. 22.4MCCh. 22 - Prob. 22.5MCCh. 22 - Sykes Corporation's comparative balance sheets at...Ch. 22 - Prob. 22.7MCCh. 22 - Prob. 22.8MCCh. 22 - Prob. 22.1BECh. 22 - Prob. 22.2BECh. 22 - Prob. 22.3BECh. 22 - Prob. 22.4BECh. 22 - Prob. 22.5BECh. 22 - Prob. 22.6BECh. 22 - Prob. 22.7BECh. 22 - Operating Activities Section, Indirect Method,...Ch. 22 - Prob. 22.9BECh. 22 - Prob. 22.10BECh. 22 - Prob. 22.11BECh. 22 - Prob. 22.12BECh. 22 - Prob. 22.13BECh. 22 - Operating Activities Section, Indirect Method,...Ch. 22 - Prob. 22.15BECh. 22 - Prob. 22.16BECh. 22 - Prob. 22.17BECh. 22 - Prob. 22.18BECh. 22 - Prob. 22.19BECh. 22 - Prob. 22.20BECh. 22 - Prob. 22.21BECh. 22 - Prob. 22.22BECh. 22 - Complex Transactions, Acquisitions and...Ch. 22 - Prob. 22.24BECh. 22 - Prob. 22.25BECh. 22 - Complex Transactions, Change in Accounts...Ch. 22 - Prob. 22.27BECh. 22 - Prob. 22.28BECh. 22 - Prob. 22.1ECh. 22 - Prob. 22.2ECh. 22 - Prob. 22.3ECh. 22 - Prob. 22.4ECh. 22 - Prob. 22.5ECh. 22 - Prob. 22.6ECh. 22 - Prob. 22.7ECh. 22 - Prob. 22.8ECh. 22 - Prob. 22.9ECh. 22 - Prob. 22.10ECh. 22 - Statement of Cash Flows, Indirect Method....Ch. 22 - Prob. 22.12ECh. 22 - Prob. 22.13ECh. 22 - Prob. 22.14ECh. 22 - Prob. 22.15ECh. 22 - Prob. 22.16ECh. 22 - Prepare Statement of Cash Flows, Direct Method....Ch. 22 - Prob. 22.2PCh. 22 - Prob. 22.3PCh. 22 - Prob. 22.4PCh. 22 - Statement of Cash Flows, Indirect Method, Complex...Ch. 22 - Statement of Cash Flows, Indirect Method, Complex...Ch. 22 - Statement of Cash Flows, Indirect Method, Complex...Ch. 22 - Statement of Cash Flows, Indirect Method, Complex...Ch. 22 - Statement of Cash Flows, Indirect Method, Complex...Ch. 22 - Statement of Cash Flows, Indirect Method, Complex...Ch. 22 - Prob. 22.11PCh. 22 - Prob. 22.12PCh. 22 - Prob. 22.13PCh. 22 - Statement of Cash Flows, Direct Method, Complex...Ch. 22 - Prob. 1JCCh. 22 - Prob. 1FSCCh. 22 - Prob. 1SSCCh. 22 - Surfing the Standards Case 2: Cash Flow per Share...Ch. 22 - Basis for Conclusions Cases Basis for Conclusions...Ch. 22 - Basis for Conclusions Case 2: Indirect versus...
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- Preparing Net Cash Flows from Operating Activities-Direct Method Colassard Industries has the following data available for preparation of its statement of cash flows: Required: Prepare the cash flows from operating activities section of the statement of cash flows using the direct method.arrow_forwardUse the following information from Albuquerque Companys financial statements to determine operating net cash flows (indirect method).arrow_forwardPreparing a Statement of Cash Flows-Direct Method The controller of Newstrom Software Inc. provides the following information as the basis for a statement of cash flows: Required: 1. Calculate the net cash provided (used) by operating activities. 2. Calculate the net cash provided (used) by investing activities. 3. Calculate the net cash provided (used) by financing activities.arrow_forward
- Reporting Net Cash Flow from Operating Activities The following information is available for Cornelius Inc: Required: 1. Compute the net cash flows from operating activities using the indirect method. 2. CONCEPTUAL CONNECTION Explain why Cornelius was able to report net cash flow from operating activities that was higher than net income. 3. CONCEPTUAL CONNECTION What could the difference between net income and cash flow from operating activities signal to financial statement users?arrow_forwardUse the following cash transactions relating to Lucknow Company to determine the cash flows from operating, using the direct method.arrow_forwardAnalysis of Longmind Companys accounts revealed the following activity for Equipment, with descriptions added for clarity of analysis. How would these two transactions be reported for cash flow purposes? Note the section of the statement of cash flow, if applicable, and if the transaction represents a cash source, cash use, or noncash transaction.arrow_forward
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