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# Statement of Cash Flows

### Direct method and indirect method for reporting cash flows

Compare and contrast the direct method and the indirect method for reporting cash flows from operating activities.

### Statement of Cash Flows from Two Different Companies

The following income statement and balance sheet information are available for two firms. Prepare a statement of cash flows for each firm using the in-direct method. Analyze the difference in the two firms. Attached is the financial statements as p140.doc.

### Indirect and Direct Method: Calculate Cash Flows

1. The 2007 accounting records of Verlander Transport reveal these transactions and events. Payment of interest \$ 10,000 Collection of accounts receivable \$182,000 Cash sales 48,000 Payment of salaries and wages 53,000 Receipt of dividend revenue 18,000 Depreciation expense 16,000 Payment of income taxes 12,000 Proceeds fr

### Calculate operating cash flow

Consider the following project. Project X has a five-year life. The Project X requires \$90,000 of fixed assets that are classified as five-year property for MACRS. Variable costs equal 64 percent of sales. Fixed costs are \$13,500 and the tax rate is 34 percent. Year Sales MACRS 1 \$28000 20 2 \$34000 32 3 \$39000 19.2 4

### Capital Budgets effect on Operating Cash Flow (OCF)

Consider a 2-year project with the following information: initial fixed asset investment = \$495,000; straight-line depreciation to zero over the 2-year life; zero salvage value; selling price = \$39; variable costs = \$20; fixed costs = \$210,000; quantity sold = 150,000 units; tax rate = 31 percent. How sensitive is Operating

### Bryers Corporation: Statement of Cash Flows

Presented below is information related to the operations of Bryers Corporation. December 2006 2005 2006_ Cash \$ 63,000 \$ 40,000 Sales \$420,000 Accounts receivable 58,000 48,000 Cost of goods sold 190,000 Inventory 37,000 22,000 Gross profit 230,000 Prepaid expenses 16,000 20,000 Depreciation expense 14,

### Statement of cash flows - operating activities

Prepare the operating activities section of the statement of cash flows using the indirect and direct method. P17-5A Grania Company's income statement contained the condensed information below. GRANIA COMPANY Income Statement For the Year Ended December 31, 2008 Revenue \$970,000

### Cash Flow

Explain the value of separating cash flows into operating activities, investing activities, and financing activities to financial statement users in analyzing cash flows and the company's financial performance and condition.

### Analysis of Cash Flows for Lamb Corporation

Analysis of Cash Flows In its consolidated cash flow statement for the year ended December 31, 20X2, Lamb Corporation reported operating cash inflows of \$284,000, cash outflows of \$230,000, and \$80,000 for investing and financing activities, respectively, and an ending cash balance of \$57,000. Lamb purchased 70 percent of Mint

### Exercise: Integrative-Determining Relevant Cash Flow

Stanforth Research is evaluating the purchase of a highly sensitive temperature measurement equipment (TME) device. The new device will replace an existing piece of equipment that was purchased two years ago for \$60,000 and is being depreciated using a five-year recovery period under ACRS. This equipment has 5 years of useful li

### Statement of cash flows

A work in process account for a company contained the following entries: Work in process account Debit of \$40,000 for direct raw materials Debit of \$60,000 for direct labor Debit of \$30,000 for manufacturing overhead Ending balance, \$42,000, associated with job #2 The company uses a job-order cost system. Work was on

### How to Calculate the Amount of Cash Flow from Operating Activity

Following income statement was drawn from the annual report of a company: Cash revenue \$30,000 Depreciation expense (10,000) Accrued interest expense (3,000) Cash operating expense (12,000) Operating income 5,000 Gain on Sale of asset 600 Net income \$5,600 The amou

### Statement of cash flow

Prepare statement of cash flows (indirect method) using balance sheet data. Presented below are comparative balance sheets for Branco, Inc., at January 31 and February 28, 2004. Please provide simple step by step explanations. BRANCO, INC. Balance Sheets February 28 and January 31, 2004 F

### Statement of Cash Flows: operating, investing, financing activities

1. Which of the following is a cash flow from an investing activity? payment for advertising cash receipt from a customer for a previous credit sale cash received from sale of equipment payment of dividends 2. Sonny's Liquors, Inc. had the following cash flows during March: Paid for in

### This posting of an formatted MS Excel spreadsheet contains an illustration for the determination of amount of cash flows prepared by indirect method.

Income statement was \$200,000. Depreciation was recorded on fixed assets and patents for \$20,000 and \$7,000. balance of assets and liability at the end and at the beginning of year are as follows: end beginning cash \$50,000

### Incremental Cash Flow multiple choice

Darth Vader, Inc. is looking at setting up a new manufacturing plant in Death Star to produce TIE fighters. The company bought some land a decade ago for \$40 billion. The land was appraised recently for \$30 billion. Darth Vader wants to build the new plant on this land; the plant will cost \$50 billion to build, and the site r

### Financial Accounting - An example in the creation of a cash flow statement using the direct method.

This file contains a formatted MS Excel spreadsheet that illustrates the creation of a cash flow statement using the direct method.

### Ramirez Company: Prepare a Statement of Cash Flows, Indirect method for 2007

The comparative balance sheets for Ramirez Company as of December 31 are presented below. RAMIREZ COMPANY Comparative Balance Sheets December 31 Assets 2007 2006 Cash \$ 71,000 \$ 45,000 Accounts receivable 44,000 62,000 Inventory 151,450 142,000 Prepaid expenses 15

### Financial accounting: statement of cash flows using direct method for Star Company

Star company Comparative balance sheets As of December 31, 2007 and 2006 2007 2006 Cash \$15,000 \$4,000 A/R 17,500 12,950 Short term invest 20,000 30,000 Inventory 42,000 35,000 Prepaid rent 3,000 12,

### Computing Cash Flow Using Indirect Methods

1. Compute cash provided by operating activities using the indirect method. Martinez, Inc. reported net income of \$2.5 million in 2007. Depreciation for the year was \$160,000, accounts receivable decreased \$350,000, and accounts payable decreased \$280,000. Compute net cash provided by operating activities using the indirect ap

### Direct and Indirect Presentations of Cash Flows

1) What are the differences between the direct and indirect presentation of cash flows? Why does the Financial Accounting Standards Board (FASB) allow both methods? Which do you prefer? Why? 2) What are some common ratios that are used to analyze financial information? Which are the most important? What are some examples of

### Managerial Accounting - Statement of Cash Flows

Please see the attached document. Thank you. EXERCISE 13-3 Net Cash Provided by Operating Activities (Indirect Method) (LO3) For the year just completed, Strident Corporation, an office equipment wholesaler, had net income of \$84,000. Balances in the company's current asset and current liabilities accounts at the beginni

### The preparation of a cash flow statement.

Prepare a Statement of Cash Flows for the Crosby Corporation. Sales \$2,200,000 Cost of goods sold 1,300,000 Gross profits 900,000 Selling and administrative expense 420,000 Depreciation expense 150,000 Operating income 330,000 Interest expense 90,000 Earnings before taxes 240,000 Taxes 80,000 Earnings after taxes 160,0

### Multiple Choice Questions on statement of cash flows: cash receipts from sales, cash inflows from investing activities, operating activities, Noncash investing and financing activities

1) A company has credit sales of \$300,000 and cash sales of \$180,000 during the same year that the Accounts Receivable account decreased by \$40,000. What was the total of cash receipts from sales? a. \$440,000. b. \$520,000. c. \$340,000. d. \$260,000. 2) Cash inflows from investing activities include a. sale of common s

### MCQ Questions for Statement of Cash Flows

Use the following information to prepare the operating section of a statement of cash flows using the indirect method and answer questions 12 and 13: 20x8 20x7 Accounts Receivable \$54,000 \$38,000 Inventory \$48,000 \$50,000 Prepaid Insurance \$25,000 \$17,000 Accounts Payable \$32,000 \$27,000 Wages Payable \$21,000 \$17,000 Net

### Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the

6.Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the a. direct method. b. indirect method. c. working capital method. d. cost-benefit method. 13.Gator Company reported net income of \$40,000 for the year ended December 31, 2007. During the yea

### Operating Activities Section

Lafave Inc., a service company, has the following selected information at December 31, 2006 (see attachment). Balance Sheets 2006 2005 Cash \$83,000 \$61,000 Accounts receivable 78,000 86,000 Prepaid Expenses 12,000 6,000 Accounts Payable 92,000 87,000 Income Taxes Payable 17,00

### Preparing worksheet for statement of cash flows/statement of cash flows - Satellite 2010

Using given information, prepare a worksheet for statement of cash flows/statement of cash flows. SATELLITE 2010 Worksheet for a Statement of Cash Flows For the Year Ended December 31, 2005 Effects of Transactions Balance sheet effects: Beginning Debit Credit Ending Balance Changes Ch

### Preparing statement of cash flows using direct method - 21st Century Technologies

Using given information in attachment (sheet 1) prepare a statement of cash flows using direct method. See the attached file. 21st CENTURY TECHNOLOGIES Income Statement For the Year Ended December 31, 2005 Revenue: Net sales \$3,200,000 Interest revenue 40,000 Gain on sales of marketable securi

### Statement of cash flows using the indirect method - Weller Company

Additional data: 1. Dividends declared and paid were \$25,000 2. During the year equipment was sold for \$8,500 cash. This equipment cost \$18,000 originally and had a book value of \$8,500 at the time of sale. 3. All depreciation expense is in the selling expense category. 4. All sales and purchases are on account. Instruction