Question

Using a spreadsheet to complete the statement of cash flows— indirect method

Companies can use a spreadsheet to complete the statement of cash flows. Each item that follows is recorded in the transaction analysis columns of the spreadsheet.

1. Net income
2. Increases in current assets (other than Cash)
3. Decreases in current liabilities
4. Cash payment for acquisition of plant assets
5. Cash receipt from issuance of common stock
6. Depreciation expense

Identify each as being recorded by a Debit or Credit in the statement of cash flows section of the spreadsheet

Short answer

1. Debit
2. Credit
3. Credit
4. Credit
5. Debit
6. Debit

Step-by-step solution

Step-by-Step SolutionStep 1: Statement of cash flow using indirect method and spreadsheet

Organizations can use a spreadsheet to prepare cash flow statements using the indirect method. In the spreadsheet first balance sheet is prepared followed by the cash flow statement.

Identification of transaction as debit or credit

Particulars	Debit or Credit
Net Income	Debit
Increase in current assets (other than cash)	Credit
Decreases in current liabilities	Credit
Cash payment for acquisition of plant assets	Credit
Cash receipt from issuance of common stock	Debit
Depreciation Expense	Debit