List (in the correct order) and briefly discuss the five steps that are followed when preparing the statement of cash flows by the indirect method.
What will be an ideal response?
Step 1: Complete the cash flows from operating activities section using net income and adjusting for increases or decreases in current assets (other than cash) and current liabilities. Also, adjust for gains or losses from long-term assets and non-cash expenses such as depreciation expense.
Step 2: Complete the cash flows from investing activities section by reviewing the long-term assets section of the balance sheet.
Step 3: Complete the cash flows from financing activities section by reviewing the long-term liabilities and equity sections of the balance sheet.
Step 4: Compute the net increase or decrease in cash during the year. The change in cash is the key reconciling figure for the statement of cash flows and must match the change in cash reported on the comparative balance sheet.
Step 5: Prepare a separate schedule reporting any non-cash investing and financing activities.
You might also like to view...
Information that is material means that an error or alternative method of handling a transaction
a. Would possibly affect the judgment of someone relying on the financial statements b. Would not affect the decisions of users c. Might cause a company to understate its earnings for the accounting period d. Could increase the profitability of a company
The parol evidence rule refers to the:
A. use of the equitable doctrine of promissory estoppel to prevent parties from seeking compensation under the statute of frauds. B. rule that perjury in criminal sentences is a non-bailable offense. C. oral evidence given by the defendant during a hearing. D. idea that when the parties have expressed their agreement in a complete, unambiguous writing, the writing is the best evidence of their intent.
Answer the following statement(s) true (T) or false (F)
6. The main way humans communicate is with language and chemical exchange just like ants. 7. There is a definite interdependence between an organization and its external environment. They each affect the way one functions and survives. 8. Equitifinality is a principal that asserts that for any given goal, there are multiple paths that organizational members can take to achieve it. 9. The object or change is systematic; some aspect of the system is selected for change as a result of a previous diagnosis and in collaboration with people within the organization. 10. The organization change should be systemic since the target or change is the system, the ritual.
If one of your main sources of stress is the sheer number of things that need to be done, getting organized should help you feel more in control.
Answer the following statement true (T) or false (F)