Answer:
A cash flow statement is one of the most important statements along with the income statement and balance sheet in the financial statements.
A statement of cash flow lets the organization know how much precisely on cash that came in and went out of the organization in any given period.
a) To predict future cash flow: this is a function of the cash flow statement as it enables the organization predict from past figures through a cash projection statement which modifies and accounts for anticipated changes in price, volume, interest rates, and other factors and enables the firm know how much cash is likely to flow in and out of the entity in any given future period. This enables the firm know where it stands in terms of liquidity and also helps in budgeting and making long-term plans for the organization.
b) To evaluate management decision: The cash flow statement is a great indication of a firms liquidity which is a vital indicator a the firms ability to remain in business. The cash flow statement enables investors know the exact amount of cash the has come in and out of the organization and not the profit and loss (which can be influenced through profit smoothing). The cash flow statement portrays how well cash has been spent by the company and what the cash was spent on.
c) Predict the ability to make debt payments to lenders and pay dividends to stockholders: the cash flow statement helps the firm acknowledge how much in cash i.e. how liquid the firm is which is basically its ability to make debt payments as well as any other cash payment required such as payment of dividend. The cash flow statement also lets the firm know is it would require borrowing to make any such payment.
Explanation:
Answer:
a. $200 decrease in net income.
Explanation:
When insurance is paid in advance, the entries required are;
Debit Prepaid Insurance
Credit Cash account
As time elapses and the insurance expires,
Debit Insurance expense
Credit Prepaid Insurance
Given that the Adjustments columns show expired insurance of $200, this will be recorded as an expense and will thus decrease the net income.
Answer:
d. 1.0.
Explanation:
Four-firm concentration ratio is the ratio of the sales of the four largest firms in the industry relative to total industry sales. In industry B total sales is of $10 million and the top four combined have total sales of $10 million
Therefore, the four firm concentration ratio = $10 million/ $10 million = 1
Therefore correct answer is option B i.e. 1.0
Answer: A. Zero because all the gains offset the losses.
Explanation:
Based on the information given in the question, the net capital gain/loss for the current year will be:
First and foremost, we should note that the net income of $26,000 will not be added to our calculations.
Then, we then add the gain on capital assets from the options a-d given and subtract from the capital loss. This will be:
= $13,000 - ($23,000) + $4,000 + $6,000
= $13000 + $4000 + $6000 - $23000
= $23000 - $23000
= 0
Note that $23000 was subtracted because it was the only loss incurred on the capital asset from the options.
