ssume that net income is $45,000 and depreciation expense is $15,000, and assume no other differences between net income and cash flow. Would net income be more or less than cash flow from operations?
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Company A's annual Income Statement shows net income of $75,000 and depreciation expense of $25,000. Its Balance Sheet as of the end of the year shows the following information: What amount should Company A report as net cash flow from operating activities in the Statement of Cash Flow, assuming no other transactions/accounts?
Jenny W.
The net income reported on the income statement for the current year was $210,000. Depreciation recorded on equipment and a building amount to $62,500 for the year. Balances of the current asset and current liabilities accounts at the beginning and end of the year are as follows: End of Year Beginning of Year Cash $56,000 $59,500 Accounts receivable (net) 71,000 73,400 Inventories 140,000 126,500 Prepaid expenses 7,800 8,400 Accounts payable (merchandise creditors) 62,600 66,400 Salaries payable 9,000 8,250 Required: a. Prepare the cash flows from operating activities section of the statement of cash flows, using the indirect method. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments. Operating Activities Section Cash flows from operating activities: $ Adjustments to reconcile net income to net cash flow from operating activities: Changes in current operating assets and liabilities: Net cash flow from operating activities $ b. If the direct method had been used, would the net cash flow from operating activities have been the same?
Madhur L.
The net income reported on the income statement for the current year was $\$ 210,000$. Depreciation recorded on equipment and a building amounted to $\$ 62,500$ for the year. Balances of the current asset and current liability accounts at the beginning and end of the year are as follows: \begin{tabular}{lrr} & End of Year & Beginning of Year \\ \hline Cash & $\$ 56,000$ & $\$ 59,500$ \\ Accounts receivable (net) & 71,000 & 73,400 \\ Inventories & 140,000 & 126,500 \\ Prepaid expenses & 7,800 & 8,400 \\ Accounts payable (merchandise creditors) & 62,600 & 66,400 \\ Salaries payable & 9,000 & 8,250 \end{tabular} a. Prepare the Cash Flows from Operating Activities section of the statement of cash flows, using the indirect method. b. If the direct method had been used, would the net cash flow from operating activities have been the same? Explain.
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