Indirect Method SOCF

Question 1

what information does an income statement require?

Answer 1

net income from income statement & comparative balance sheets to assess assets, liabilities & equity for cfo, cfi & cff

Question 2

what is the format for the cfo section in a socf?

Answer 2

net income
adjustments to NI
increase in a/r
increase in a/p
net cash from operations

Question 3

what are adjustments to NI?

Answer 3

debiting a/p and crediting a/r to make them 0 in order to rectify NI

NI is an accrual based number and SOCF is all about cash in hand

Question 4

what is the format of the cfi section in a socf?

Answer 4

purchase of equipment
net cash from investing

Question 5

what is the format of the cff section in a socf?

Answer 5

issuance of stock
payment of dividends
net cash from financing

Question 6

what does the bottom of an indirect socf show?

Answer 6

net increase in cash
cash balance, beginning
cash balance, ending

Question 7

what does net cash used/provided mean?

Answer 7

net cash used = incurred a loss in that section

net cash provided = earned a profit in that section