Determine cash flows from operations

1. When the indirect method is used for the statement of cash flows, how and why is net income affected by changes in current operating liabilities to determine cash flows from operations?

2. If a company sells a building that cost $150,000 and that has $80,000 of accumulated depreciation for $65,000, how does the company reflect this event on the statement of cash flows? Why?

1. During the year, Garsombke Company sold trading securities costing $7,500 at a loss of $500. What amount of cash did Garsombke raise from this transaction, and where would Garsombke report it on the statement of cash flows?

2. During the year, Kwak, Inc., issued 40,000 shares of $1 par value common stock in exchange for land. The appraised value of the land was $580,000. Kwak’s common stock was trading at $15 per share at he time of the exchange.

Where, and in what amount, would Kwak report this transaction on the statement of cash flows for the period?


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