Summary Business Accounting

Question:

Refer to the situation described in Exercise 4–18.

Required:

Prepare the cash flows from operating activities section of Tiger’s 2013 statement of cash flows using the

direct method. Assume that all purchases and sales of inventory are on account, and that there are no

anticipated bad debts for accounts receivable. (Hint: Use T-accounts for the pertinent items to isolate the

information needed for the statement.)



Answer:



The T-account analysis of the transactions related to operating cash flows is shown below. To derive the

cash flows, the beginning and ending balances in the related assets and liabilities are inserted, together

with the revenue and expense amounts from the income statements. In each balance sheet account, the

remaining (plug) figure is the other half of the cash increases or decreases.