The Prince Company Reported Net Income of $260,000 for the Current

question 54

Essay

The Prince Company reported net income of $260,000 for the current year.Depreciation recorded on buildings and equipment amounted to $90,000 for the year.Balances of the current asset and current liability accounts for 2011 and 2012 are as follows:
Prepare the cash flows from operating activities section of the statement of cash flows using the indirect method.

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Definitions:

Expense Account(s)

Accounts used to record expenses in the general ledger, which represent the costs of operating a business that are not directly tied to the production of goods or services.

Income Summary

An account used in the closing process, summarizing all revenues and expenses for a period, to transfer the net result to capital accounts.

Capital Account

A capital account is an account on a company's balance sheet that represents the equity investment of owners and shareholders.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to a permanent equity account.