Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 12 - Statement of Cash Flows - Questions: 18

Answer

a) CASH FLOW STATEMENT b) JOURNAL ENTRY TO CONVERT TO COMMON STOCK FROM BONDS c) HOW IT IS RECORDER

Work Step by Step

a) It is the statement which shows the inflow & out flow of cash within an organization. It is basically of three parts - Cash from operating activity - Cash flow from investing activity - Cash flow from financing activity In order to survive, the ability of a company to make profit is not enough, it also important for a company to generate sufficient cash for its survive. This can be ascertain by the cash flow statement. b) Bonds payable A/C Dr 17000000 dollars To common stock A/C 17000000 dollars c) When the R&S Company converts its 17000000 dollars of its total 20000000 dollars of bonds payable into common stock. This transaction will have no effect in the cash flow statement. This is because there was no movement of cash in this transaction.
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