Eric,
Another item to help study is the IMA's Statement of Cash Flows Tutorial. After logging into the IMA website got to the Education Center tab and in the drop down click on course catalog. Then in the search put "Cash flows" and the Tutorial will come up for free with your membership.
Sincerely,
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Emmylou Duell
Rochester, NY, USA Chapter President
NY-Ontario Regional Council Vice President
Global Components Round Table (GCRT) Member
Chair of the Member Engagement Subcommittee of the GCRT
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Original Message:
Sent: 12-02-2020 05:02 PM
From: Eric Catalan
Subject: Cash Flow from Operations
Figured it out. Thank you.
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Eric Catalan
Other
Accullent, LLC
Woodland Hills CA
United States
Original Message:
Sent: 12-02-2020 03:21 PM
From: Eric Catalan
Subject: Cash Flow from Operations
I apologize for the basic question. I am just starting my review and am on SU1. I graduated 36 years ago and can barely remember. There is a question in the review test to compute cash from operating activities using the indirect method.
Amortization expense | $ 150,000 |
Cash dividends paid to common shareholders | 75,000 |
Net income | 1,500,000 |
Work-in-process inventory increase over the prior year | 300,000 |
Gain on sale of equipment | 50,000 |
Using the indirect method, cash flow from operating activities would be? The answer is $1,300,000.
But Cash Flow from Operating Activities should consider cash effects on activities relating to investing or financing cash flows. Why was the $75,000 Cash Dividends not adjusted to the Net Income just like the Gain on Sale of Equipment?
Thanks.