Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 1HIC
To determine
Explain the difference in amount of depreciation and amortization from income statement and statement of cash flow.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Here is the complete worksheet I am working on for my homework. The blank spots I had to fill in are:
Income statement: sales and costs of goods sold for 2018
Balance sheet was cash and net fixed assets for 2018
Cash flow statements were: depreciation, accounts receivable and accts payable
Can you let me know if the information I have provided looks correct? I just want to make sure I am on the right track. Thank you!
Income Statement
For the year:
2016
2017
2018
Sales
$ 120,000
$ 150,000
$ 180,000
Cost of Goods Sold
$ 100,000
$ 120,000
Gross Profit
$ 60,000
General, Selling, & Administrative Expense
$ 50,000
Depreciation
$ 8,500
Net Income
$ 1,500
Balance Sheet
For the year ending:
2017
2018
Assets
Cash
$…
Chic Chalk company has charged a depreciation of $500,120 for one of its equipment, on
its income statement. The company is planning for an increase in this depreciation. On the
financial statements of Chic Chalk this will
a. Decrease net cash flow from operations on the cash flow statement.
b. Not impact the cash flow statement
c. Increase in net cash flow from operations on the cash flow statement.
d. No impact the Income statement
According to the images, answer the following questions:
1. During the year ended March 11th, 2017, how much did Sainsbury’s receive in cash due to sales of plant, property and equipment?
a) 55
b) 314
c) 634
d) 466
e) None of the Above
2. During the year ended March 11th, 2017, how much net cash flow did Sainsbury’s generate from operating activities (including interest and taxes paid)?
a) (63)
b) 1,077
c) 1,323
d) 1,153
e) None of the above
3. In which part of the Statement of Cash Flows does Sainsbury’s classify interest received and dividend received?
a) Cash Flows from Operations
b) Cash Flows from Investing
c) Cash Flows from Financing
d) Not classified
4. What amount of long–term borrowings did Sainsbury’s repay during the year? You can ignore capital leases
a) 492
b) 130
c) 466
d) 448
e) None of the above
5. What is the difference between the Net profit for the financial year and “Net cash generated from operating activities (CFO)”?
a) Net profit is 776 greater than CFO
b) Net…
Chapter 3 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
Ch. 3 - Need for a Statement of Cash Flows. The accrual...Ch. 3 - Articulation of the Statement of Cash Flows with...Ch. 3 - Classification of Interest Expense. Under U.S....Ch. 3 - Prob. 4QECh. 3 - Classification of Changes in Short-Term Financing....Ch. 3 - Classification of Cash Flows Related to...Ch. 3 - Treatment of Non-Cash Exchanges. The acquisition...Ch. 3 - Computing Cash Collections from Customers....Ch. 3 - Computing Cash Payments to Suppliers. Lowes...Ch. 3 - Computing Cash Payments for Income Taxes. Visa...
Ch. 3 - Interpreting the Relation between Net Income and...Ch. 3 - Interpreting the Relation between Net Income and...Ch. 3 - Interpreting Relations among Cash Flows from...Ch. 3 - Interpreting Relations among Cash Flows from...Ch. 3 - Interpreting the Statement of Cash Flows. The...Ch. 3 - Interpreting the Statement of Cash Flows. Texas...Ch. 3 - Interpreting the Statement of Cash Flows. Tesla...Ch. 3 - Interpreting the Statement of Cash Flows. Gap Inc....Ch. 3 - Prob. 19PCCh. 3 - Prob. 20PCCh. 3 - Interpreting the Statement of Cash Flows....Ch. 3 - Extracting Performance Trends from the Statement...Ch. 3 - Interpreting a Direct Method Statement of Cash...Ch. 3 - Prob. 24PCCh. 3 - Preparing a Statement of Cash Flows from Balance...Ch. 3 - Prob. 26PCCh. 3 - Preparing a Statement of Cash Flows from Balance...Ch. 3 - Prob. 1AICCh. 3 - Prob. 1BICCh. 3 - Prob. 1CICCh. 3 - Prob. 1DICCh. 3 - Prob. 1EICCh. 3 - Prob. 1FICCh. 3 - Prob. 1GICCh. 3 - Prob. 1HICCh. 3 - Prob. 2AICCh. 3 - Prob. 2BICCh. 3 - Prob. 2CICCh. 3 - Prob. 2DICCh. 3 - Prob. 2EICCh. 3 - Prob. 2FICCh. 3 - Prob. 3IC
Knowledge Booster
Similar questions
- This is an accounting question about reconciling direct-method cash flow from operations to net income. I have read that generally for a simple noninventory situation the approach would be something like: Net Income Plus depreciation Minus Change in Current Assets Plus Change in Current Liabilities --> Should equal cash flows from operations in the cash flow statement. My question is about purchasing a long-term asset on account. A journal entry is made: credit accounts payable/debit long-term asset. If I generate a cash flow statement, the increase in current liabilities caused by that entry will be a part of the equation above. But that amount is not an operating cash flow, it is an investing cash flow. So my reconciliation to operating activities will be off by that amount. It seems like there's a missing adjustment in the equation, like "Minus assets purchased on account" or something like that. Example: Say my company just started and so far only has $5K contibuted cash in the…arrow_forwardHow do you find "Cash Payment for Acquisition of Plant Assets"? Requirement 1. Prepare the 2024 Statement of Cash Flows by the direct method. (Use a minus sign or parentheses for amounts that result in a decrease in cash. If a box is not used in the statement, leave the box empty; do not select a label or enter a zero.) Complete the statement one section at a time, beginning with the cash flows from operating activities. Sweet Valley, Inc. Statement of Cash Flows Year Ended December 31, 2024 Cash Flows from Operating Activities: Receipts: Collections From Customers $443,700 Interest Received $8,200 Total Cash Receipts $451,900 Payments: To Suppliers (197,700) To Employees (77,400) For Interest (21,100) For Income Tax (19,400)…arrow_forwardWhich of the following situations required us to make an downward adjustment to net income (subtracting) when computing operating cash flows? (check all that apply) A. there was a depreciation expense B. some property was sold for a gain on the net book value C. some recognized expenses were for COGS to suppliers paid for on account D. there were some recognized revenues in accounts receivablearrow_forward
- Your goal is to prepare a Statement of Cash Flows within the problem noted below. In the Excel Template provided, you will find the Balance Sheet of Marina Comp for December 31, 2013. In addition to the information on the Balance Sheet, we are presented with the following additional data related to current year operations: 1. Net income for the year 2013, $66,000. 2. Depreciation on plant assets for the year, $12,700. 3. Sold the long-term investments for $28,000 (assume gain or loss is ordinary). 4. Paid dividends of $25,000. 1 / 2 5. Purchased machinery costing $21,500, paid cash. 6. Purchased machinery and gave a $60,000 long-term note payable. 7. Paid a $40,000 long-term note payable by issuing common stock.arrow_forwardAbiss company has erroneously skipped recording depreciation on one of its equipment amounting to $25,000, in its income statement. The company is planning for an increase in this depreciation. On the financial statements of Abiss this will Decrease net cash flow from operations on the cash flow statement. b. Not impact the cash flow statement c. Increase in net cash flow from operations on the cash flow statement d. No impact the Income statementarrow_forwardAbiss company has erroneously skipped recording depreciation on one of its equipment amounting to $25,000, in its income statement. The company is planning for an increase in this depreciation. On the financial statements of Abiss this wil . a. Decrease net cash flow from operations on the cash flow statement. b. Not impact the cash flow statement c. Increase in net cash flow from operations on the cash flow statement d. No impact the Income statementarrow_forward
- Use the following information to prepare a statement of cash flows (indirect method) for Sink Industries for the year ended December 31, 2018, and calculate ending cash flows: Net income for the year 2018 was $5,000. Accounts receivable decreased $2,000, while inventories increased $4,000, and accounts payable decreased $7,000. Depreciation expense included in net income was $8,000. During the year, a piece of land held for future expansion was sold for its book value of $8,000, and a new service truck was purchased for $14,000. The company borrowed $18,000 on a two-year note from the bank. Dividends of $6,000 were paid in cash. preferred stock was issued to retire $7,000 of long-term notes payable. The beginning cash balance was $10,000.arrow_forwardGiven the following excerpt from the Statement of Cash Flows under Operating Activities, how much of the following accounts have changed during 2021 due to operating activities? (in millions; Your answers may be positive or negative. Put a positive number for the increase and a negative number for the decrease. Use a minus (-) sign to indicate a negative number.) Cash flow from changes in current assets and liabilities, excluding the effects of divestitures: Receivables 27.9 Inventories (354.7) Prepaid expenses and other current assets Accounts payable (42.7) 343.1 Other current liabilities Changes in current assets and liabilities (129.5) (155.9) Account Amount ($) Change in Accounts receivable 2$ Change in Inventories 24 Change in Accounts payable 24arrow_forwardRequired:a) Prepare a statement of cash flows for the year ended 2008, using the indirect method.b) Calculate the free cash flow and comment on it.arrow_forward
- Suppose your company sells services of $260 in exchange for $175 cash and $85 on account. Depreciation of $105 relating to equipment also is recorded. 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).arrow_forwardRefer to the financial statements and related disclosure notes of The Kroger Company for the fiscal year endingJanuary 30, 2016. You can locate the report online from “investor relations” at www.kroger.com.Notice that Kroger’s net income has increased over the three years reported. To supplement their analysis ofprofitability, many analysts like to look at “free cash flow.” A popular way to measure this metric is “structuralfree cash flow” (or as Warren Buffett calls it, “owner’s earnings”), which is calculated as net income from operations, plus depreciation and amortization, minus capital expenditures.Required:Determine free cash flows for Kroger in each of the three years reported. Compare that amount with net incomeeach year. What pattern do you detect?arrow_forwardCurrently Abby is charged $4,569,333 Depreciation on the Income Statement of Andrews. Andrews is planning for an increase in this depreciation. On the financial statements of Andrews this will do which of the following? Select : 1 Save Answer Decrease Net Cash from Operations on the Cash Flow Statement. Increase Net Cash from Operations on the Cash Flow Statement. Have no impact on the Net Cash from Operations as depreciation appears in both Cash Flow and the Income Statement. Decrease Net Cash from Operations on the Income Statement.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT