question archive Preparing a Cash Flow Statement Nikea Inc
Preparing a Cash Flow Statement Nikea Inc
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Preparing a Cash Flow Statement Nikea Inc.’s income statement for the year 2013 is shown below: During the year, the balances for the sales account, cost of goods sold, and gross profit increased. This information is provided to you. Prepare the cash flow for operating activities, using both the direct method and the indirect method.
Nikea’s income statement for the year 2013 is shown below.
Accounts Amount ($) Sales 600,000
Cost of Goods Sold (400,000)
Gross Profit 200,000
Operating Expenses (30,000)
Deprecation (20,000)
Net Income 150,000
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Answer:
NIKEA INC
Direct method
Cash flow statement for the year 2013
| Cash collected from customers | $600,000 |
| Cash paid to acquire inventory | (400,000) |
| Cash paid to oprating expenses | (30,000) |
| Cash generated from operating activities | $170,000 |
NIKEA INC
Indirect method
cash flow statement for the year 2013
| NET INCOME | $150,000 |
| ADD non operating expenses | |
| Depreciation | $20,000 |
| Cash generated from operating activities | $170,000 |
Here indirect method of cash flow statement begin with the net income
