Quiz 14: P14: Statement of Cash Flows Cashflow

Business

Table showing worksheet for statement of cash flow for Company P: img

In general, for debit accounts, the formula to find the ending account balance is beginning balance plus any debits less any credits. For credit accounts, the formula to find the ending account balance is beginning balance less debits plus credits. Prepare the worksheet showing analysis of transactions as follows: img Record the corresponding entry under operating activities, investing activities, or financing activities and indicate each transaction with a letter. Prepare the worksheet showing analysis of transactions as follows: img Prepare the statement of cash flows as follows: img Here, debit and credit balances are equal. The change in cash flow from (a) matches the summary of transactions total. In addition, the transaction debits and credits are equal as well. This means that the worksheet is balanced. Prepare the cash flow statement considering the two errors made, as follows: img img Hence, the change in cash has reduced to $ 7,610

A company prepares a statement of cash flows to clearly indicate how cash flows during a fiscal period. This statement shows three main categories that uncover information about operating activities, investing activities, and financing activities. A statement of cash flows for Company P using the indirect method is as follows: img The statement of cash flows is broken down into three sections of activities; operating, investing, and financing. The change in account balances from the balance sheet are indicated here to show how and where cash flows during the year.

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