Business College

Which of the following is disclosed separately in a statement of cash flows using the indirect method?
A. Cash received from customers
B. Cash paid to employees and other suppliers
C. Increase in retained earnings for the period
D. Net income

Answers

Answer 1

Answer:

C. Increase in retained earnings for the period

Explanation:

The Standard that deals with the Presentation and discloser of Cash flow statement (IAS7) requires that the items that do not involve the use of cash must be disclosed separately. That means item C , increases in retained earnings for the period is disclosed separately since it does not involve the use of cash.

Answer 2

A statement of cash flows is refer to the financial statement that shows how changes are made in the balance sheet accounts and how income affect cash and cash equivalents.

A statement of cash flows

Correct option is C.

In indirect method no general cash receipts ad cash payments in operating cash flow is shown, it relates to displaying adjustments in net income, and changes in working capital etc.

In indirect method the accountant adjust various factors like non cash transactions from the net income of the year.

Therefore, Correct option is C.

Learn more about cash flows, refer to the link:

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Related Questions

The Mazzanti Wholesale Food Company's fiscal year-end is June 30. The company issues quarterly financial statements requiring the company to prepare adjusting entries at the end of each quarter. Assume all quarterly adjusting entries were properly recorded.

1. On December 1, 2020, the company paid its annual fire insurance premium of $7,200 for the year beginning December 1 and debited prepaid insurance.
2. On August 31, 2020, the company borrowed $115,000 from a local bank. The note requires principal and interest at 8% to be paid on August 31, 2021.
3. Mazzanti owns a warehouse that it rents to another company. On January 1, 2021, Mazzanti collected $26,400 representing rent for the 2021 calendar year and credited deferred rent revenue.
4. Depreciation on the office building is $19,200 for the fiscal year.
5. Employee salaries for the month of June 2021 $19,500 will be paid on July 20, 2021.

Required:
Prepare the necessary year-end adjusting entries at the end of June 30, 2018, for the above situations.

Answers

Answer:

1. Dr Insurance expense 1,800

Cr Prepaid insurance 1,800

2. Dr Interest expense 2,300

Cr Interest payable 2,300

3. Dr Deferred rent revenue 6,600

Cr Rent revenue 6,600

4. Dr Depreciation expense 4,800

Cr Accumulated depreciation—building 4,800

5. Dr Salaries and wages expense 19,500

Cr Salaries and wages payable 19,500

Explanation:

Preparation of the necessary year-end adjusting entries at the end of June 30, 2018, for the above situations

1. Dr Insurance expense 1,800

Cr Prepaid insurance 1,800

($7,200 × 3/12)

2. Dr Interest expense 2,300

Cr Interest payable 2,300

($115,000× 8% × 3/12)

3. Dr Deferred rent revenue 6,600

Cr Rent revenue 6,600

($26,400 × 3/12)

4. Dr Depreciation expense 4,800

Cr Accumulated depreciation—building 4,800

($19,200 × 3/12)

5. Dr Salaries and wages expense 19,500

Cr Salaries and wages payable 19,500

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