Cash Flow Statement - 275 Words

Cash Flow Statement (Math Problem Sample) Content: ACC 206 Week Assignment Name Institution Date Critical Thinking Question:Why are noncash transactions, such as the exchange of common stock for a building for example, included on a statement of cash flows? How are these noncash transactions disclosed? Cash Flow statement represents the comprehensive statement that outlines the sources of cash funds and their application for an entity over a given accounting period. It is therefore an analytical tool that determines the liquidity position of a firm/entity. Its preparation is founded on the international accounting standards (IAS) 7. Cash flow statements provide a detailed analysis of the financial and non-financial transactions reported in the operations of an entity over a specified period of time. Both cash and non-cash transactions are included in the cash flow statements. The inclusion of the non-cash transactions is founded on the â€Å"cash and cash equivalents† principle of the ca sh flow statement. According to this principle, non-cash transactions that are highly liquid and convertible to known monetary amounts of cash are accorded the same accounting treatment as other cash transactions, hence their inclusion in the cash flow statements. Some non-cash transactions are included in the cash flow statement in the account that they constitute investing or financing activities that are not directly related to the firm’s operating activities. Non-cash transactions mainly fall under this category of financing or investing activities that have no effect on the firm’s cash outlay or inflows. However, these transactions involves long-term resources and owner’s equity, hence the justification for their inclusion in the cash flow statements. IAS (7) and the General Accepted Accounting Principles (GAAP) outlines the disclosure principle for these non-cash financing and investing activities. The two principles state that non-cash transactions shoul d be disclosed in footnotes of the financial statements for the same accounting period. In most occasions, these financing and investing activities are disclosed in a separate schedule to enhance accountability during the preparation of financial statements. Classification of activitiesClassify each of the following transactions as arising from an operating (O), investing (I), financing (F), or noncash investing/financing (N) activity. ________ Received $80,000 from the sale of land – Investing Activity ________ Received $3,200 from cash sales – Operating Activity ________ Paid a $5,000 dividend – Financing Activity ________ Purchased $8,800 of merchandise for cash – Investing Activity ________ Received $100,000 from the issuance of common stock – Financing Activity ________ Paid $1,200 of interest on a note payable – Financing Activity ________ Acquired a new laser printer by paying $650 – Investing Activity ________ Acquired a $400,000 building by signing a $400,000 mortgage note Non-cash Investing Activity Overview of direct and indirect methods Evaluate the comments that follow as being True or False. If the comment is false, briefly explain why. Both the direct and indirect methods will produce the same cash flow from operating activities - False. This because direct method is not adjusted for other cash flow items including depreciation and exchange loss. Depreciation expense is added back to net income when the indirect method is used - True. One of the advantages of using the direct method rather than the indirect method is that larger cash flows from financing activities will be reported - True. The cash paid to suppliers is normally disclosed on the statement of cash flows when the indirect method of statement preparation is employed - True. The dollar change in the Merchandise Inventory account appears on the statement of cash flows only when the direct method of statement prepa ration is used – False; exchange losses adjustment are common with indirect method rather direct method. Equipment transaction and cash flow reporting Dec. 31, 20X4 Dec. 31, 20X3 Property, Plant & Equipment: Land  $94,000  $94,000 Equipment 652,000527,000Less: Accumulated depreciation -316,000-341,000 New equipment purchased during 20x4 totaled $280,000. The 20x4 income statement disclosed equipment depreciation expense of $41,000 and a $9,000 loss on the sale of equipment. Determine the cost and accumulated depreciation of the equipment sold during 20X4. Determine the selling price of the equipment sold. Show how the sale of equipment would appear on a statement of cash flows prepared by using the indirect method. Workings DR. Equipment Account As at 31st Dec. 2004 CR. Bal. b/d 527,000 Purchases/Cash 280,000 Acc. Depreciation (2003) 341,000Provision for Dep. (2004) 316,000 Sale s/Cash 180,000 Bal. c/d 652,000 $1,148,000 $1,148,000 Disposal A/C DR. As at 31st Dec. 2004 CR. Equipment 180,000 Acc. Depreciation 41,000 Proceed from Sales 130,000 Loss on Disposal 9,000 $180,000 $180,000 Cost of the Equipment = $180,000 Accumulated Depreciation = $41,000 Selling Price = $130,000 Sample Cash Flow Statement Cash Flow from Operating Activities Net Profit before Tax xxxx Adjusted for: Depreciation $41,000 Loss on disposal of Equipment $9,000 $50,000 Cash Flow from Investing Activities Purchase of Equipment (280,000) Proceeds from Disposal of Equipment 130,000 Cash flow information: Direct and indirect methods The comparative year-end balance sheets of Sign Graphics, Inc., revealed the following activity in the company's current accounts: 20X5 20X4Increase / Decrease) Current assets Cash $55,400 $35,200 $20,200 Accounts receivable (net) 83,80088,000-4,200Inventory 243,400233,8009,600Prepaid expenses 25,40024,2001,200Current liabilities Accounts payable $123,600 $140,600 ($17,000)Taxes payable 43,60049,200-5,600Interest payable 9,0006,4002,600Accrued liabilities 38,80060,400-21,600Note payable 44,000— 44,000The accounts payable were for the...

Learning How to Learn - Free Essay Example

Learning How to Learn Ashley McDowell, Vanessa Hanson, and Michael James American Intercontinental University ABSTRACT In this paper, you will see how types of learners are vastly different and yet very similar at their approach to learning. This will also cover how diverse individuals are at learning. It includes examples of approaches and how each learner completes the situation, why it’s important for students to know how they learn, and how a group with diverse learners can work together. Learning How to Learn To begin, learning is simply the process in which a person engages in the act of creating knowledge and as you have new concrete experiences you observe and reflect upon them. While in doing so people blend these experiences with existing concepts and in turn begin to form new concepts that they then apply. Throughout your daily life you test these new concepts as you use them in subsequent situations. (AIU Online, 2005) Everyone learns differently and doesn’t approach learning the same way. Prime example, in a group of three, two people has the convergers learning style while the other has the assimilator learning style. Convergers and assimilators both have the same thinking, the abstract conceptualization. They are different in several ways. Convergers like doing (active experimentation, hands on), excel in areas such as laboratories, field work, and homework. They like to ask the question, how can I apply this in practice? While assimilators learn by watching (reflective observation), they usually excel in lectures, papers, and analogies. Assimilators like to ask the question, how does this relate to that? Betcher Esichaiku, 2008) After collecting information, doing research, and actively discussing the Kolb learning styles, our group found that it was made up of two of the four styles, Convergers and Assimilators. Although there are many differences in learning styles one thing is for certain. All learning styles fit the learner to optimize their learning. Topics discussed ranged in variety, in a common situation, planning a trip, we saw that the assimilator would begin planning as much in advan ce as possible. Where the converger could just hop on a plane, bus, car etc. and just go. Good thing for Assimilators they are likely to receive special discounts for buying tickets in advance, while the convergers may not. Convergers, have a practical approach. One member of our group was tasked with giving a class on countertop installation with the necessary materials and instructions, and five days to prepare. Her knowledge of her learning style was beneficial by eliminating the stress of not knowing if she could obtain all this information and present this class. Working well alone allowed her to capitalize on another trait associated with the Converger learning style. By understanding your individual learning style and developing the skills that help you learn in a variety of ways, you make the most of your learning potential. And because your better able to learn and gather information you’ll make better decisions, and choose better courses of action( mindtools LTD, 1995-2010) allowing you to be able to work effectively in groups and teams. In understanding that other people can have quite different learning preferences, you can learn to communicate your message effectively in a way that many more people understand. References Bechter, C Esichaikul, V. 2008). Using Kolb’s Learning Style Inventory for E-Learning Personalization. Retrieved from https://www. iadis. net/dl/final_uploads/200818L015. pdf AIU Online (2005, May 15). The Learning Process and Styles [text materials]. Retrieved from AIU Online Virtual Campus. Academic and Professional Success: UNIV103:23 website. Mindtools LTD (1995-2010). Using Kolb’s Learning Style I nventory for E- Learning Personalization. Retrieved from https://www. mindtools. com/mnemlsty. html