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: 15

Answer

a) INDIRECT METHOD b) CASH FLOW STATEMENT c) FIVE ITEMS THAT ARE REQUIRED TO ADJUSTED TO CONVERT NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITY UNDER INDIRECT METHOD ARE AS FOLLOWS

Work Step by Step

a) Under this method of calculating, cash flow from operating activities, all the required figures are calculated by employing information contained in the profit & loss account and Balance sheet. This method does not use information contained within the accounting records. b) 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. c) - Depreciation on fixed asset and writing off intangible assets like goodwill patent rights etc - Loss or profit on sale of fixed assets - Dividend received on investments - Discount on issue of shares - Increase of decrease in working capital items.
Update this answer!

You can help us out by revising, improving and updating this answer.

Update this answer

After you claim an answer you’ll have 24 hours to send in a draft. An editor will review the submission and either publish your submission or provide feedback.