lc-11.pptx. nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnn

this is all about finance

1. Indirect Method First part is operating activities Non-cash expenses are added non-cash revenues are deducted. Gain on sale of non-current assets - deducted loss on sale of non-current assets – added - because the cash transaction is recorded under investing activities.

2. …….Indirect Method ….First part is operating activities Changes in current assets and current liabilities are either added or deducted depending on whether they increased or decreased during the year. Increase in current assets – deducted from net income Decrease in current assets – added to net income Increase in current liabilities – added to net income Decrease in current liabilities – deducted from net income

3. Indirect Method i . First part is operating activities

4. Accounts Receivable – increases revenue which increases net income but is not a cash transaction – increases cash but does not change the net income Prepaid Expense – decreases cash but does not change the net income – increases expenses which decreases net income but is not a cash transaction Decrease in current assets – added to net income

5. Accounts Payable – increases expenses which decreases net income but is not a cash transaction – decreases cash but does not change net income Unearned Income – increases cash but does not change the net income - increases revenue which increases net income but is not a cash transaction

6. ii. Second part is investing activities

7. iii. Third part is financing activities

8. The company presented the following in order to aid the accountant in preparing the CFS: a. Net income: P200,000 b. Depreciation expense : P 25,000 c. Gain on sale of property and equipment: P100,000 d. Decrease in trade and other receivables: P 70,000 e. Purchase of property and equipment: P200,000 f. Payment of loan from bank: P150,000 Compute for the cash generated/used in financing activities. Based on the given above, compute for the net change in cash for the year. If ending balance of cash account is P700,000, prepare the CFS for the year.