-CASH FLOWS FROM THE OPERATING ACTIVITIES SECTION OF STATEMENT OF CASH FLOWS- IN
ID: 2547876 • Letter: #
Question
-CASH FLOWS FROM THE OPERATING ACTIVITIES SECTION OF STATEMENT OF CASH FLOWS- INSTRUCTIONS: Selected data from various accounts during a fiscal year are presented below. By the use of X's, indicate whether each of the items will be (1) added to or (2) deducted from net income in arriving at cash flows from n the statement of cash filows using the indirect method. If the change is not reported in termination of cash flows from operating activities, place an X in the Not Reported column Cash Flows from Operating Activities DeductedNot Added to Net Income from Net Income ITEMS Reported S 0. Stock dividends declared 1. Amortization of bond discount 2. Building and land purchased by issuing common stoc.... 3. Increase in prepaid expenses.. 4. Depreciation expense on equipment. 5. Increase in dividends payable 6. Common stock issued for cash 7. Increase in inventories.... 8. Increase in accounts payable 9. Gain on sale of land · Amortization expense on patents Loss on sale of long-term investments... Decrease in accounts receivableExplanation / Answer
Cash flow from operating activities
Items
Added to net income
Deducted from net income
Not reported
Reasons
Stock dividends declared
X
Net profit has been reduced but not operating activities
Amortization of bond discount
X
Net profit has been reduced but not operating activities
Increase in prepaid expenses
X
Increase in current assets
Depreciation expenses on equipment
X
Non-cash expenses
Increase in dividends payable
X
Non-operating activities
Common stock issued for cash
X
Non-operating activities
Increase in inventories
X
Increase in current assets
Increase in accounts payable
X
Increase in current liabilities
Gain on sale of land
X
Non-operating activities but has increased the net income
Amortization expense on patent
X
Non-cash expenses
Loss on sale of long-term investment
X
Non-operating activities but has decreased the net income
Decrease in accounts receivable
X
Decrease in current assets
Cash flow from operating activities
Items
Added to net income
Deducted from net income
Not reported
Reasons
Stock dividends declared
X
Net profit has been reduced but not operating activities
Amortization of bond discount
X
Net profit has been reduced but not operating activities
Increase in prepaid expenses
X
Increase in current assets
Depreciation expenses on equipment
X
Non-cash expenses
Increase in dividends payable
X
Non-operating activities
Common stock issued for cash
X
Non-operating activities
Increase in inventories
X
Increase in current assets
Increase in accounts payable
X
Increase in current liabilities
Gain on sale of land
X
Non-operating activities but has increased the net income
Amortization expense on patent
X
Non-cash expenses
Loss on sale of long-term investment
X
Non-operating activities but has decreased the net income
Decrease in accounts receivable
X
Decrease in current assets
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