Instructions Excel Assessment In This Assignment You Will De

Instructionsexcel Assessment In This Assignment You Will Demonstrat

This assignment requires demonstrating proficiency in using Excel to solve an accounting problem by preparing a Statement of Cash Flows using both the direct and indirect methods. You will analyze comparative balance sheets, an income statement, and additional information to complete these tasks. Emphasis will be placed equally on the correct application of Excel functions and on the accurate creation of the cash flow statements.

Specifically, you are instructed to:

  • Use the provided comparative balance sheets and income statement, along with additional details, to prepare a Statement of Cash Flows using the Direct Method, placing your response on the designated tab.
  • Use the same sources to prepare a Statement of Cash Flows using the Indirect Method, placing your response on the appropriate tab.
  • Apply Excel formula functions for all calculations, avoiding copy-paste techniques from the balance sheets or income statement; instead, reference data via formulas.
  • Incorporate additional provided information such as asset sales, investments, dividend payments, stock issuance, and specific expenses related to uncollectible accounts and depreciation.

Paper For Above instruction

The task of preparing a Statement of Cash Flows using both the direct and indirect methods necessitates a comprehensive understanding of accounting principles and proficiency in Excel. This process involves analyzing the financial statements and supplemental data to accurately classify cash flows into operating, investing, and financing activities. The meticulous application of formulas ensures accuracy, while referencing data from other sheets maintains data integrity and facilitates updates.

Beginning with the direct method, the primary objective is to detail the actual cash inflows and outflows associated with operating activities. This involves adjusting net income by non-cash items, such as depreciation, and changes in working capital accounts like accounts receivable, inventory, accounts payable, and taxes payable. For instance, increases in accounts receivable are deducted from cash collections, whereas increases in accounts payable are added back, reflecting cash retained by the company.

The additional information provided enhances accuracy: the sale of investments and equipment, dividend payments, issuance of stock, and specific expenses impact the cash flows and must be incorporated accordingly. The sale of investments worth $25,000, and the sale of equipment originally purchased for $20,000 with 40% depreciation, must be considered carefully to reflect the actual cash received and gains or losses on sale. Likewise, the issuance of stock in exchange for land signifies a financing activity involving cash inflows.

Transitioning to the indirect method involves starting with net income and adjusting for non-cash expenses like depreciation and gains or losses from asset sales, along with changes in working capital. This method emphasizes the reconciliation of net income to net cash provided by operating activities, highlighting differences between accrual accounting income and cash transactions.

Throughout the process, adherence to best practices in Excel is imperative: referencing cells with formulas rather than copying figures, employing functions such as SUM, IF, and formula referencing, and ensuring clarity and organization of data. These methods not only guarantee accuracy but also enhance the transparency and reproducibility of your financial analysis.

Overall, completing this assignment demands careful analysis of financial statements, precise calculation, and proficient Excel skills. Properly executed, this exercise demonstrates a comprehensive understanding of cash flow analysis vital for financial decision-making.

References

  • Brigham, E. F., & Houston, J. F. (2019). Fundamentals of Financial Management. Cengage Learning.
  • Cash Flow Statements: An Analytic Approach to Financial Statements. (2020). Journal of Financial Analysis, 12(4), 245-259.
  • Gutteridge, C., & Rees, G. (2018). Advanced Excel for Accountants. Wiley.
  • Heisinger, K. M., & Hoyle, J. B. (2017). Managerial Accounting. Pearson.
  • Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2018). Intermediate Accounting. Wiley.
  • Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2019). Financial Accounting Theory and Analysis. John Wiley & Sons.
  • Sharma, D. (2021). Practical Guide to Financial Modeling in Excel. Routledge.
  • Watson, M., & Head, A. (2017). Corporate Finance: Principles & Practice. Pearson.
  • White, G. I., Sondhi, A. C., & Fried, D. (2003). The Analysis and Use of Financial Statements. Wiley.
  • Zijderveld, M. F. (2020). Modern Excel Techniques for Financial Analysis. Springer.

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