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Home Q & A Board Other Fields Homework Help Business Accounting
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anuong05 anuong05
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A month ago
You are on a team responsible for addressing cash flow problems with other managers in your corporate division. Your accounting department has provided your team with the statement of cash flows prepared using the indirect method. At your first meeting, some of the managers have expressed concerns about the statement's understandability and do not view the statement as anything other than a "rearranged income statement." The managers have requested that your team explain to them how the statement is constructed.

Required:

Answer the following questions posed by the managers relating to the investing and financing sections of the statement of cash flows.

a.What types of items are reported in the investing section of the statement of cash
flows?
b.How is the book value of a plant asset shown on the statement of cash flows?
c.What types of items are reported in the financing section of the statement of cash
flows?
Textbook 
Managerial Accounting

Managerial Accounting


Edition: 4th
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smiller94107smiller94107
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A month ago
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More solutions for this book are available here
a.Investing activities involve investments in assets other than current operating assets.
These activities include purchases and sales of property and equipment, loans made and collected, and purchases and sales of another company's stock.
b.Book value is the cost of an asset less accumulated depreciation. When an asset is
sold, the difference in the proceeds and the book value is recorded as a gain or loss. Although the "book value" does not appear on the statement of cash flows, the depreciation and gain or loss is shown in the operating section as an adjustment to net income when using the indirect method.  The cash flows from investing activities reports only the cash effect of transactions.
c.Financing can be obtained through either debt or equity. Financing activities include
issuing and repaying debt, issuing and repurchasing stock, and paying dividends. Balance sheet accounts in the non-operating liability and equity accounts are used to record financing activities.

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anuong05 Author
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A month ago
Thanks
sleinhi
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Yesterday
this is exactly what I needed
byehoe
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2 hours ago
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