The Cash Flows from Operating Activities Are Reported by the Direct

question 118

Short Answer

The cash flows from operating activities are reported by the direct method on the statement of cash flows.Determine the following:
a.If accrued expenses showed $50,000 on the income statement and payables increased from $15,000 to $18,500 on the balance sheet,what was the amount of cash paid?
b.If insurance expense showed $10,000 on the income statement and Prepaid Insurance increased from $10,000 to $12,000 on the balance sheet,what was the amount of cash paid for insurance?

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Definitions:

Scarcity of Resources

The fundamental economic problem of having seemingly unlimited human wants in a world with limited resources.

Necessity of Choice

An economic principle stating that due to scarce resources, individuals and societies must make decisions on how to best allocate those resources.

Self-Sufficient

The quality or condition of being able to fulfill all one's needs without reliance on external assistance.

Specialize

To focus on a specific area of production or study to gain efficiency or expertise.