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Howard Company Uses the Direct Method to Prepare Its Operating

Question 115

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Howard Company uses the direct method to prepare its operating activities section of the statement of cash flows.
Indicate how each event affects net income and the three types of activities on the statement of cash flows. In the net income column, use the letter "I" to indicate increase, the letter "D" to indicate decrease, and the letters "NA" to indicate that the income statement is not affected. In the three cash flow columns, use the letter "I" to indicate cash inflow, the letter "D" to indicate cash outflow, and the letters "NA" to indicate that the cash flow statement is not affected.
At the beginning of the current year, Howard Company paid cash to purchase equipment costing $80,000. There was $10,000 of depreciation expense recognized during the accounting period. (Show the combined effects of these two events.)
Howard Company uses the direct method to prepare its operating activities section of the statement of cash flows. Indicate how each event affects net income and the three types of activities on the statement of cash flows. In the net income column, use the letter  I  to indicate increase, the letter  D  to indicate decrease, and the letters  NA  to indicate that the income statement is not affected. In the three cash flow columns, use the letter  I  to indicate cash inflow, the letter  D  to indicate cash outflow, and the letters  NA  to indicate that the cash flow statement is not affected. At the beginning of the current year, Howard Company paid cash to purchase equipment costing $80,000. There was $10,000 of depreciation expense recognized during the accounting period. (Show the combined effects of these two events.)

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(D)(NA)(D)(NA)The purchase of equipment ...

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