Class27 - More problems

Class27 - More problems - Solution to PROBLEM 23-7, a good...

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Solution to PROBLEM 23-7, a good sample SCF problem (a) Both the direct method and the indirect method for reporting cash flows from operating activities are acceptable in preparing a statement of cash flows according to SFAS No. 95; however, the FASB encourages the use of the direct method. Under the direct method, the statement of cash flows reports the major classes of cash receipts and cash disburse-ments, and discloses more information; this may be the statement’s principal advantage. Under the indirect method, net income on the accrual basis is adjusted to the cash basis by adding or deducting noncash items included in net income, thereby providing a useful link between the statement of cash flows and the income statement and balance sheet. (b) The Statement of Cash Flows for George Winston Company, for the year ended May 31, 2008, using the direct method, is presented below. George Winston Company STATEMENT OF CASH FLOWS For the Year Ended May 31, 2008 Cash flows from operating activities
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Class27 - More problems - Solution to PROBLEM 23-7, a good...

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