Capaz company completed its statememt of earning and statement of financial posi
ID: 2409221 • Letter: C
Question
Capaz company completed its statememt of earning and statement of financial position for 2018 and provodedthe following information:
Statement of Earnings for 2018
Service revenue $53,ooo
Expenses
Salaries $41,000
Depreciation 7,000
Amortization of copyrights 200
Other expenses 9,700 57,900
Net earnings (Loss) $4,900
Partial Statement of Financial Position 2018 2017
Account receivable $8,000 $15,000
Salaries payable 15,000 1,000
Other accured liabilities 1,000 5,100
In addition, Capaz bought a small service machine for $5,000.
Required:
1. Present the operating activities section of the statement of cash flows for Capaz Company using the indirect method.
2. What were the major reasons that Capaz was able to report a net loss but positive cash flow from operations? Why are the reasons for the difference between cash flow from operations and net earnings important to financial analysts?
If you can provide the answers in Excel Sheet that would be great.
Explanation / Answer
Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Net Income/(Loss) -4900 Adjustment to reconcile Net income with operating cash flow: Depreciation 7000 Amortization 200 Decrease in Accounts Receivable 7000 Increase in Salary Payable 14000 Decrease in Acrued Liabilities -4100 Cash from operating Activities 19200 the major reasons that Capaz was able to report a net loss but positive cash flow 1. Depreciation- Which is being considered as expense in Income Statement, but not a cash outflow 2. Accrual Accounting the reasons for the difference between cash flow from operations and net earnings important to financial analysts? This tells real health of the company to analysts
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