University:
Grand Rapids Community College
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

336

Pages:

2
Author:

stud_ice13

To tackle this series of exercises, here’s a breakdown of how to approach each type of question for Business Solutions. If you need further examples or templates, let me know. SP 12: Preparing a Statement of Cash Flows for Business Solutions (Indirect Method) Objective: Prepare a statement of cash flows using the indirect method for the period ending March 31, 2022. Key Steps: 1. Operating Activities: o Start with net income for the period (if available). o Adjust for non-cash expenses (e.g., depreciation). o Adjust for changes in working capital accounts (like accounts receivable, accounts payable, and inventory). 2. Investing Activities: o List any cash outflows or inflows related to the purchase or sale of long-term assets. o Include cash flows related to equipment purchases, land acquisition, or similar. 3. Financing Activities: o List cash flows from any owner contributions or dividends paid. o In this case, include Santana Rey’s contribution of $25,000 and any dividends paid, such as the $4,800. 4. Summarize the Totals: o Calculate net cash provided or used in each section. o Sum these totals to determine the net increase or decrease in cash. o Add this result to the beginning cash balance to find the ending cash balance. 5. Verify Balances: o Ensure totals match given balances or other references in the question. Exercises on Cash Flow Concepts (General Tips) 1. Classifying Cash Flows (e.g., Exercise 12-1): o Differentiate operating, investing, and financing activities by the type of account or transaction. o Common rule of thumb:  Operating: day-to-day business transactions.  Investing: purchase or sale of long-term assets. Financing: obtaining or repaying capital, like debt or equity transactions. 2. Preparing Cash Flows from Operations (Indirect Method): o Adjust net income by adding back non-cash expenses and adjusting for working capital changes. 3. Investing and Financing Activities: o Identify transactions affecting long-term assets or equity/debt accounts. o Example: Selling equipment or purchasing land are investing activities. 4. Direct Method Exercises: o Calculate cash flows from operating activities by listing cash receipts and payments directly (e.g., cash received from customers, cash paid to suppliers).  General Ledger (GL) Assignments & Tableau Dashboard Activities For GL Assignments: • • Prepare journal entries based on provided transactions. Post entries to the ledger, create a trial balance, and prepare the statement of cash flows. For Tableau Dashboard Activities: • • Tableau tasks often focus on interpreting visualized data to assess cash flow changes. Review trends in net increase or decrease in cash and analyze cash flow by activity type. Would you like more specific details or templates for any of the exercises? Or guidance on any particular step?