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Chapter 23
Memorandum
To: Eric Conner and Phil Martin, CM2
From: L. Harbach
Re: Statement of Cash Flows
Date: February 18, 2013
Here are my responses to your questions about the statement of cash flows:
1. The purpose of the statement of cash flows is to help users assess (1) the
2. The three categories are operating, investing, and financing activities.
3.
asset(s) the company sold and the proceeds from the sale(s) as well as what
4.
of new capital funds, which helps them understand changes in the debt/equity
5. The direct method uses the cash flow in from customers less the cash flow
out to suppliers, employees, etc. This method is preferred by the FASB. If the
6.
depreciation because it was using the indirect method to calculate cash flow from
Continuing Case Solution
7. The adjustment for accounts receivable on the statement of cash flows
indicates whether credit sales were larger than collections, or whether cash
collections were larger than credit sales. An increasing number of credit sales