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Finance & Accounting
Pages 3 (753 words)
Name: Institution: Professor: Date: Diamondz Corp report 1. Cash flow statement for the year ended 31 December 2012 using the indirect method Operating activities Net income 50,000 Adjustments to reconcile cash Depreciation expense 60,000 Loss on sale of equipment 10,000 Changes in current accounts Decrease in accounts receivable (41,000) Increase in prepaid expenses (9,000) Increase in accounts payable 5,000 Increase in salaries payable 5,000 Decrease in taxes payable (10,000) Cash inflow from operating activity 70,000 Investing activities Purchase of equipment (125,000) Proceeds from the sale of equipment 20,000 Proceeds from the sale of land 90,000 Cash used by investing activities (15,000…
To Anoop and Meli, cash flow is very important as it translates the earnings reported in the company’s income statement which is subject to accounting decisions and reporting regulations- into a simple summary of how much cash has been generated by the company during the stated financial period (Porter and Norton 674). Cash flow statement also plays a huge role in facilitation of decision making by the provision of judgments on the financial condition, profitability and company’s financial management. The cash flow statement for Diamondz has a net decrease in cash of 25,000 which indicates that the financing and investing activities were more than the cash inflow during the year which may be an indication of a poor financial performance on the company. b. ...
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