Howard Company Uses the Direct Method to Prepare Its Operating

question 58

Essay

Howard Company uses the direct method to prepare its operating activities section of the statement of cash flows.
Indicate how each event affects net income and the three types of activities on the statement of cash flows. In the net income column, use the letter "I" to indicate increase, the letter "D" to indicate decrease, and the letters "NA" to indicate that the income statement is not affected. In the three cash flow columns, use the letter "I" to indicate cash inflow, the letter "D" to indicate cash outflow, and the letters "NA" to indicate that the cash flow statement is not affected.
Howard Company purchased $4,000 of supplies, paying $1,500 in cash and charging the remainder on account. $1,600 of the supplies were used during the accounting period. (Show the combined effects of the events.)

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Definitions:

Maslow's Hierarchy

A theory of psychological motivation based on a hierarchy of needs, from basic survival needs to self-actualization.

Lower-Order Physiological Needs

Basic human necessities such as food, water, shelter, and sleep that are essential for survival.

Adequate Compensation

Refers to fair and sufficient payment or remuneration provided to employees for their work, balancing their contributions with their earnings.

Maslow's Hierarchy

A theory in psychology proposed by Abraham Maslow, structured as a hierarchical pyramid with physiological needs at the base, ascending to self-actualization at the top.