CASH FLOW STMT

Question 1

CF - Direct and Indirect method impact on operating activities

Answer 1

Direct - cash received from customers and paid to suppliers.
Indirect - list adjustments from NI to reach the net increase or decrease in cash. Adjustment include increase or decrease in CA and CL. Gain on sale of PPE is a non cash item which is shown in operating cash flow section.

Question 2

Items of cash flow from operating, invst and fimancing

Answer 2

Interest on bonds payable - operating
Dividend paid to stock holders - financing activities - cash outflow and buying stock of another company - investing

Cash inflow in financing actities- proceeds from issue of common stock, borfowing line of credit and issuing bonds

Question 3

At the end of the previous year, Tommy Inc. had accrued interest payable of $10,000. In the current year, Tommy reported interest expense of $20,000 and cash paid for interest of $5,000 in the statement of cash flows. What amount will Tommy report as accrued interest payable at the end of the current year?

Answer 3

PY ACC INTEREST payable - 10000
CY - INT EXP - INT PAID Reported on CFS - op activities. 20000-5000 = 15000

CY INT PAYABLE = 10000+15000 = 25000