ACC 206 week 1 assignment
ACC 206 Week Assignment
Please complete the following 5 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.
1. Critical Thinking Question:
Answer the following questions:
Why are noncash transactions, such as the exchange of common stock for a building for example, included on a statement of cash flows? How are these noncash transactions disclosed?
This reveals a non cash investing and financial activity that needs to be recorded, mainly because these transactions do not trigger a direct inflow or outflow of cash, but they are nonetheless highly significant investing and financing events. They are disclosed in the reporting noncash investing and financing activities.
2. Classification of activities
Classify each of the following transactions as arising from an operating (O), investing (I), financing (F), or noncash investing/financing (N) activity.
a. ___I_____ Received $80,000 from the sale of land.
b. __O______ Received $3,200 from cash sales.
c. ___F_____ Paid a $5,000 dividend.
d. ____O____ Purchased $8,800 of merchandise for cash.
e. ____I____ Received $100,000 from the issuance of common stock.
f. __F______ Paid $1,200 of interest on a note payable.
g. __I______ Acquired a new laser printer by paying $650.
h. ____N____ Acquired a $400,000 building by signing a $400,000 mortgage note.
3. Overview of direct and indirect methods
Evaluate the comments that follow as being True or False. If the comment is false, briefly explain why.
a. Both the direct and indirect methods will produce the same cash flow from operating activities.
True statement; the indirect approach is an alternative method for preparing the statement of cash flows for the direct method.
b. Depreciation expense is added back
Please complete the following 5 exercises below in either Excel or a word document (but must be single document). You must show your work where appropriate (leaving the calculations within Excel cells is acceptable). Save the document, and submit it in the appropriate week using the Assignment Submission button.
1. Critical Thinking Question:
Answer the following questions:
Why are noncash transactions, such as the exchange of common stock for a building for example, included on a statement of cash flows? How are these noncash transactions disclosed?
This reveals a non cash investing and financial activity that needs to be recorded, mainly because these transactions do not trigger a direct inflow or outflow of cash, but they are nonetheless highly significant investing and financing events. They are disclosed in the reporting noncash investing and financing activities.
2. Classification of activities
Classify each of the following transactions as arising from an operating (O), investing (I), financing (F), or noncash investing/financing (N) activity.
a. ___I_____ Received $80,000 from the sale of land.
b. __O______ Received $3,200 from cash sales.
c. ___F_____ Paid a $5,000 dividend.
d. ____O____ Purchased $8,800 of merchandise for cash.
e. ____I____ Received $100,000 from the issuance of common stock.
f. __F______ Paid $1,200 of interest on a note payable.
g. __I______ Acquired a new laser printer by paying $650.
h. ____N____ Acquired a $400,000 building by signing a $400,000 mortgage note.
3. Overview of direct and indirect methods
Evaluate the comments that follow as being True or False. If the comment is false, briefly explain why.
a. Both the direct and indirect methods will produce the same cash flow from operating activities.
True statement; the indirect approach is an alternative method for preparing the statement of cash flows for the direct method.
b. Depreciation expense is added back