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2 cards from this section. Quick, good the night before a test.
What do we do with depreciation in the cash flow statement?
Think about how depreciation affects cash balances.
If current assets increase, what adjustment do we make?
What happens to cash when investments in assets increase?
How are losses from asset sales treated in a cash flow statement?
Remember how asset sales affect income but not actual cash flow.
True or False: An increase in liabilities means cash is coming into the business.
Think about how liabilities affect cash flow.
Prepare a cash flow statement given the following data: Net income ₹200,000; Depreciation ₹25,000; Loss on sale of equipment ₹10,000; Increase in accounts receivable ₹15,000; Decrease in accounts payable ₹5,000.
Focus on how to handle each component properly for cash adjustments.
Discuss the potential consequences of miscalculating adjustments in a cash flow statement for decision making.
Think about how trust in financial reporting might be influenced by accuracy.
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