Ghapter 23/Accounting in Action: CM2

You were lookin" rel="nofollow">ing foruard to goin" rel="nofollow">ing to CM2today sin" rel="nofollow">ince it was your last workin" rel="nofollow">ing day as an in" rel="nofollow">intern. Tomorrow the group is plannin" rel="nofollow">ing to take you to lunch to celebrate the end of your in" rel="nofollow">internship. You figured today would be easy- just wrappin" rel="nofollow">ing up loose ends. It was not to be. You walked in" rel="nofollow">in and found people with expectant faces, holdin" rel="nofollow">ing sheets of paper, and you could tell that another "issue" had arisen. Conner and Martin" rel="nofollow">in started right off: they saw no reason at all for a statement of cash flows. They felt that CM2's cash flows were nobody's busin" rel="nofollow">iness but the bank's. Lopez and Knepp clearly were tryin" rel="nofollow">ing to explain" rel="nofollow">in that in" rel="nofollow">investors like to see where the cash flow was comin" rel="nofollow">ing from and how the cash was bein" rel="nofollow">ing used. So once again" rel="nofollow">in, you were on the spot. By now, Conner and Martin" rel="nofollow">in have learned to put their questions in" rel="nofollow">in writin" rel="nofollow">ing so they were ready with a paper on which they had written: 1. What is the poin" rel="nofollow">int of the statement of cash flows? 2. Why are there three categories of cash flow in" rel="nofollow">information? 3. What can the reader learn from the "Cash flow from in" rel="nofollow">investin" rel="nofollow">ino" section? 4. What can the reader learn from the "Cash flow from fin" rel="nofollow">inancin" rel="nofollow">ino" section? 5. What is the differcnce between the dircct and in" rel="nofollow">indirect methods for preparin" rel="nofollow">ing the "Cash flow from operations"? Contin" rel="nofollow">inrung Case l3 6. We have a copy of a statement of cash flows for another firm. Why is this firm addin" rel="nofollow">ing back depreciation? 7. Someone told us that you could learn a lot from lookin" rel="nofollow">ing at the accounts receivable adjustment to net in" rel="nofollow">income on this statement. We don't understand this at all. Mtat's to be learned? lnstructions Prepare responses to their questions. Contin" rel="nofollow">inuin" rel="nofollow">ing Case 14