All Negative Cash Outflows Should Be Entered As A Negative

Sheet1all Negative Cash Outlflows Should Be Entered As A Negative Num

All negative cash outflows should be entered as a negative number including a net loss Carpet Company- Statement of Cash Flows (Direct Method) For Year Ending Dec. 31, 2010 Cash Flow from Direct Operating Activities Cash flows from operating: Cash received from customers: Cash paid for merchandise: Cash paid for wages/other operating expenses: Cash paid for income taxes: Net cash flow - operating activities: (Total) 0 Cash flows from investing: Cash paid for equipment: _________ Net cash flow - operating activities: (Total) -------------------------------------à +I Cash flows from financing: Cash received from issuing stock: ________ Cash paid for Dividends: ________ Net cash flow financing activities: ------------------------------------------------à +I19+I Reconciliation Statement of Cash Flows (Direct Method)- For Year Ending Dec. 31, 2010 · Net increase in cash from 2009 to 2010: __________ 0 · Cash balance at prior year (2009): __________ 0 · Cash balance at current year-end (2010): __________ 0 See: Next page for Carpet Company- Statement of Cash Flows (Indirect Method) For Year Ending Dec. 31, 2010 Carpet Company- Statement of Cash Flows (Direct Method) For Year Ending Dec. 31, 2010 Cash flows from operating: Net income:________ The following are the adjustments to reconcile net income to cash provided by operations. Adjustment in accounts receivables: ________ Adjustment in merchandise inventory: ________ Adjustment in accounts payable: ________ Adjustment in income taxes payable: ________ Add back depreciation expense: ________ Net cash flow - operating activities: (Total) ----------------------à _______________ 0 (Cash flow from Investing and from financing activities and reconciliation are the same under direct and indirect methods) Cash flows from investing: Cash paid for equipment: _________ Net cash flow - operating activities: (Total) -------------------------------------à +I Cash flows from financing: Cash received from issuing stock: ________ Cash paid for Dividends: ________ Net cash flow financing activities: ------------------------------------------------à +I19+I Reconciliation Statement of Cash Flows (Direct Method)- For Year Ending Dec. 31, 2010 · Net increase in cash from 2009 to 2010: __________ 0 · Cash balance at prior year (2009): __________ 0 · Cash balance at current year-end (2010): __________ 0 For Indirect Method- Cash Flow Rules- These rules are based on comparison of a previous year's balance sheet to a current balance sheet and apply to the assets and liabilities line items from a previous year's balance to a current year's balance. Cash Flow Rules are: If Assets go up from the previous year to the current year, it is a use of cash (Company increased assets and decreased cash) If Assets go down from the previous year to the current year, it is a source of cash (Company sold assets and increased cash) If Liabilities go up from the previous year to the current year, it is a source of cash (Company increased its cash flow by using debt) If Liabilities go down from the previous year to the current year, it is a use of cash (Company decreased cash flow by paying debt) Discussion Rubric: Graduate Your active participation in the discussion forums is essential to your overall success this term. Discussion questions are designed to help you make meaningful connections between the course content and the larger concepts and goals of the course. These discussions offer you the opportunity to express your own thoughts, ask questions for clarification, and gain insight from your classmates’ responses and instructor’s guidance. Requirements for Discussion Board Assignments Students are required to post one initial post and to follow up with at least two response posts for each discussion board assignment. For your initial post (1), you must do the following: ï‚· Compose a post of one to two paragraphs. ï‚· In Module One, complete the initial post by Thursday at 11:59 p.m. Eastern Time. ï‚· In Modules Two through Ten, complete the initial post by Thursday at 11:59 p.m. of your local time zone. ï‚· Take into consideration material such as course content and other discussion boards from the current module and previous modules, when appropriate. ï‚· Reference scholarly or peer-reviewed sources to support your discussion points, as appropriate (using proper citation methods for your discipline). ï‚· Reply to at least two different classmates outside of your own initial post thread. ï‚· In Module One, complete the two response posts by Sunday at 11:59 p.m. Eastern Time. ï‚· In Modules Two through Ten, complete the response posts by Sunday at 11:59 p.m. of your local time zone. ï‚· Demonstrate more depth and thought than simply stating “I agree†or “You are wrong.†Guidance is provided for you in each discussion prompt. Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions.

Paper For Above instruction

The instruction emphasizes the correct recording of cash flows, especially negative cash outflows, which should always be entered as negative numbers. The provided scenario involves preparing a comprehensive statement of cash flows using both the direct and indirect methods for Carpet Company for the year ending December 31, 2010. The scenario includes various cash inflows and outflows from operating, investing, and financing activities, along with reconciliation statements to connect net income to cash flows and adjustments based on comparative balance sheets according to cash flow rules.

Understanding cash flow statements is vital for analyzing a company's liquidity and financial health. The direct method of preparing cash flows involves listing actual cash receipts and payments, providing a straightforward view of cash transactions. Conversely, the indirect method starts with net income and adjusts it for changes in balance sheet accounts, emphasizing the relationship between net income and cash flow. Both methods should produce comparable net cash flows, but they differ in presentation and emphasis.

Accurately recording negative cash outflows as negative numbers is essential for clarity and correctness in financial reporting. Misclassification can lead to misinterpretation, affecting decision-making by investors and management. The cash flow statements for Carpet Company require presentations under both methods, including detailed adjustments and reconciliation statements that clarify how net income converts into operating cash flows.

The cash flow rules derived from comparative balance sheets are fundamental. They specify that increases in assets are deductions (use of cash), while decreases are sources (sale of assets), and similarly for liabilities. These rules guide the adjustments in indirect cash flow calculations, ensuring consistency and accuracy. Proper understanding and application of these principles are crucial for compiling valid and reliable financial statements.

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