Intermediate Accounting -- Cash Flows in detail correctly answered

Intermediate Accounting -- Cash Flows in detailOperating Activities - correct answer Involve the cash effects of transactions that enter into the determination of net income. (Income statement items- Noncash charges, gains & losses, and change in current accounts) Investing Activities - correct answer Include making and collecting loans and acquiring and disposing of investments and PP&E. (LT asset items) Financing Activities - correct answer Include obtaining resources from owners and providing them with a return on their investment. As well as borrowing money from creditors and repaying amounts borrowed. (LT liability and equity items) Indirect Method - correct answer *Adjusts for NI items that affected NI but not cash* 1. Determine change in cash (later year - earlier year) 2. Determine net cash flow from operating activities (net income -- then adjustments) 3. Determine net cash flow from investing activities 4. Determine net cash flow from financing activities 5. Net change in cash 6. Cash beginning 7. Cash ending Direct Method - correct answer The direct method results in presenting condensed cash receipts and cash disbursements statement. Companies compute net cash provided by operating activities by adjusting each item in the income statement from accrual to cash basis accounting. * Major Cash receipts- Major Cash payments = Net cash provided by operating activities * Difference between income statement and cash flows - correct answer Income statement include noncash transactions in net income and cash flows does not