38
COMPUTER SERVICES COMPANY Statement
of Cash Flows- indirect Method For the
Year Ended December 31, 2005
Cash flow from operating activities
Net income
xxx
Adjustment to reconcile net income to net cash provided by operating activites
Depreciation expense
xxx
Loss on sale of equipment
xxx
Decrease in accounts receivable
xxx
Increase in merchandise inventory
(xxx)
Increase in prepaid expenses
(xxx)
Increase
in accounts payable
xxx
Decrease in income
tax payable
(xxx)
xxx
Net cash provided by opearting activites
Cash flow froms investing activities
Purcahse
of building
(xxx)
Purcahse
of equipment
(xxx)
Sale of equipment
xxx
Net cash used by investing activities
(xxx)
Cash flow from financing activities
Issuance
of common stock
xxx
Payment of cash dividend
(xxx)
Net cash used by financing activites
(xxx)
Net increase in cash
xxx
Cash at beginning of period
xxx
Cash at the end of period
xxx
Noncash investing and financing activites
Issuance
of bonds payable
to purchase land
xxx
Table 2.11: Statement of Cash Flow Indirect Method
Accounting Principles, 2005
2.5 Free Cash Flow
When referring to the previous section, we have focused on operating, investing and
financing activities of a cash
flow.
However, sometimes an
investor
is also attracted
to know how much cash a company can ‘free up’ for new opportunities which are
known
as
free
cash
flow.
Generally,
different
financial
statement
users
are
having
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