ACCT 1209 Lecture Notes - Lecture 32: Cash Flow Statement, Income Statement, Accounts Receivable

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cerisegiraffe538

15 Apr 2016

School

Northeastern University

Department

Accounting

Course

ACCT 1209

Professor

O' Kelly( G)

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Document Summary

Acct 1209 lecture 32 net increase (decrease) in cash; reporting and interpreting. The combination of the net cash flows from operating activities, investing activities, and financing activities must equal the net increase (decrease) in cash for the reporting period. Reporting and interpreting cash flows from operating activities. Cash flow from operating activities is always the same regardless of whether it is computed using the direct or indirect method. The investing and financing sections are always presented in the same manner regardless of the format of the operating section. The indirect method starts with net income and converts it to cash flows from operating activities. This involves adjusting net income for the differences in the timing of accrual basis net income and cash flows. The general structure of the operating activities section is: Completing the operating section using the indirect method involves two steps:

Related Questions

Natalie Daniels has completed the basic format to be used inpreparing the statement of cash flows (indirect method) for CPUHardware Designers. All amounts are in thousands (000s).

CPU HARDWARE DESIGNERS Statement of Cash Flows For the year ended December 31, 2015
Cash Flows fromOperating Activities
Netincome
Adjustments for noncash effects:
Changesin current assets and current liabilities:
Net cash flows from operatingactivities
Cash Flows fromInvesting Activities
Netcash flows from investing activities
Cash Flows fromFinancing Activities
Net cash flows from financingactivities
Net increase(decrease) in cash	$	(28,000)
Cash at thebeginning of the period		90,000

Cash at the end ofthe period	$	62,000

Below, in random order, are line items to be included in thestatement of cash flows.


Cash received fromthe sale of land	$ 4,000
Issuance of commonstock	300,000
Depreciationexpense	30,000
Increase in accountsreceivable	70,000
Increase in accountspayable	11,000
Loss on sale ofland	8,000
Purchase ofequipment	230,000
Increase ininventory	40,000
Increase in prepaidrent	11,000
Payment ofdividends	50,000
Net income	80,000
Repayment of notespayable	60,000

Required:

Prepare the statement of cash flows for CPU Hardware Designersusing the indirect method. (List cash outflows and any decrease in cashas negative amounts. Enter your answers inthousands.)

CPU HARDWARE DESIGNERS
Statement of Cash Flows
For the Year Ended December 31, 2015
Cash Flows from Operating Activities:

Adjustments to reconcile net income to net cash flows fromoperating activities








Net cash flows from operating activities		$0
Cash Flows from Investing Activities:




Net cash flows from investing activities		0
Cash Flows from Financing Activities:





Net cash flows from financing activities		0

Cash at the beginning of the period
Cash at the end of the period		$0

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EXERCISE 14-3 Calculating Free Cash Flow (L014-3] Apex Company prepared the statement of cash flows for the current year that is shown below: i $ 40,000 (6,000 34,000 Apex Company Statement of Cash Flows-Indirect Method Operating activities: Net income ................................ Adjustments to convert net income to cash basis: Depreciation ...... $ 22,000 Increase in accounts receivable .......... (60,000) Increase in inventory .... (25,000) Decrease in prepaid expenses .......... 9,000 Increase in accounts payable ............... 55,000 Decrease in accrued liabilities .......... (12,000) Increase in income taxes payable ......... 5,000 Net cash provided by operating activities ......... Investing activities: Proceeds from the sale of equipment ............. 14,000 Loan to Thomas Company ........ (40,000) Additions to plant and equipment ................ (110,000 Net cash used for investing activities ......... Financing activities: Increase in bonds payable .. 90,000 Increase in common stock ........... 40,000 Cash dividends (30,000) Net cash provided by financing activities. Net decrease in cash ..... Beginning cash balance........... Ending cash balance ...................... (136,000) 100,000 (2,000) 27,000 $ 25,000 Required: Compute Apex Company's free cash flow for the current year.

Highlight your answers.