activitín b) fdkwing would be Oper ing(0. Investing(. or Financing Mantity ir i
ID: 2438975 • Letter: A
Question
activitín b) fdkwing would be Oper ing(0. Investing(. or Financing Mantity ir i Cash paymont of dividends c) What ae the wo formats Sor the opcrating cash flow 2 How is the tatemost of eash flows prepared using the indirect method? a) When wsing the indirect method, the statoment of cash fows operating activities section begins For the oparaning aeivities, list no tems thet might be nooded for Adjuntments to reconcile Net Cah Provided by Operating Activities: e) In opeorating activities, an increase in accounts payable is (sabtracted or added d) In eperating activitis, an increase in accounts receivaible is (subtracted or added) e) Fill in the missing numbers Net Cash Net Cash Provided by lnvesting Activities Net Cash Provided by Financing Activities Net Increase (Decrease) in Cash Cash Balance, December 31, 2017 Cash Balance, December 31, 2018 30,000 (20,000) 22,000 ) Give two examples of mon-cash investing andior financing activities ?? 3. How do we use free cash flow to evaluate business performance? a) Wha s the formale fr alelating Ores ceah? b) How much free cash flow does ABC Company expect for 20XX ABC Company expects the following for Net cash provided by operating activities Cash payment for updates to facilities Cash payment for dividends to shareholders Net cash provided by financing activities 20x0X $80,000 10,000 15,000 4. How is the statement of cash flows prepared using the direct method? a) In the direct method, what ilems may be listed in the cash flows from operating activitics as receipts? b) In the direct method, what items may be listed in the cash flows from operating activities as payments?
Explanation / Answer
(2)
(a) When using net income, cash flow from operating activities begin with Net Income.
(b) The following will be adjusted for:
(i) Depreciation or amortization expenses (added back to Net income)
(ii) Gain or loss on sale of equipment (a gain is deducted from, and a loss is added to net income)
(c) Increase in accounts payable is added to net income.
(d) Increase in accounts receivable is deducted from net income.
(e)
(1) Net increase (Decrease) in cash = $(170,000 + 30,000 - 20,000) = $180,000 (increase)
(2) Cash balance, Dec 31, 2018 = $22,000 + 180,000 = $202,000
(f)
(1) Purchase of equipment by issue of bonds
(2) Leasing of an asset under capital lease
NOTE: As per Chegg Answering Policy, first question has been answered.
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