Question

Using the following data, prepare the operating activities section of a statement of cash flows for Maximum Corporation for the year ended December 31, 20X6, using the indirect method. Increase in salary payable $1,50 Decrease in accounts payable 2,0000 Increase in accounts receivable 3,500 Net income 98,00 Decrease in inventory 5,800 Increase in prepaid expenses 1,200 Depreciation expense – equipment 5,000 Depreciation expense – building 7,500 Gain on sale of equipment 1,300 Loss on sale of patent 2,500 Question 2 A. In the long run it is more important for a business to have positive cash flows from its operating activities, investing activities or financing activities? Why? B. Identify three factors that may cause net income to differ from net cash flows from operating activities. C. Describe how the Statement of Cash Flows helps investors and creditors perform each of the following functions: predict future cash flows; evaluate management decisions; predict the ability to make debt payments to lenders and pay dividends to stockholders. D. Name and explain the three (3) categories of cash-flow activities. - 2 - Question 3 Altar Company uses the indirect method to prepare

Answer 1