Asked by calista Williams on Jun 07, 2024
Verified
Show Company had total operating expenses of $153000 in 2016 which included Depreciation Expense of $30000. Also during 2016 prepaid expenses decreased by $9500 and accrued expenses increased by $8500.
Instructions
Calculate the amount of cash payments for operating expenses in 2016 using the direct method.
Direct Method
A way to prepare the cash flow statement where actual cash flow information from company’s operations segment is used.
Operating Expenses
Expenses incurred in the normal course of business operations, excluding costs of goods sold and depreciation.
Prepaid Expenses
Costs paid for in advance for goods or services to be received or used in the future, recorded as assets and subsequently expensed over the applicable period.
- Use the direct and indirect methodologies to evaluate net cash supplied by operating activities.
- Examine the relationship between balance sheet account adjustments and cash flow variations.
Verified Answer
Learning Objectives
- Use the direct and indirect methodologies to evaluate net cash supplied by operating activities.
- Examine the relationship between balance sheet account adjustments and cash flow variations.
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