After Analyzing the Following Statement of Cash Flows
1 $\quad$

question 15

Essay

After analyzing the following statement of cash flows
1.State the method Pet Halt Services uses to prepare its operating section of the statement of cash flows and explain how you arrived at your answer.
2.Explain why depreciation expense is added back to net income in the operating section of the statement of cash flows.
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Pet Halt Services }$
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Statement of Cash Flows (Partial) }$
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { For the Month ending January } 31,2012$

$\begin{array}{lr}\text {Cash flows from Operating Activities:}\\\text {Net Incone}& \$ 120,000 \\\text {Adjustments to reconcile net income to cash}\\\text {provided (used) by operating activities}\\\text { Depreciation expense } & 18,000 \\\text { Increase in accounts receivable } & (29,000) \\\text { Increase in accounts payable } & 33,000 \\\text { Net cash provided by (used for) operating activities } & \underline{\$ 142,000}\\\end{array}$

---

Definitions:

Different

Not the same as another or each other; unlike in nature, form, or quality.

Rich

Having an abundance of wealth, resources, or valuable possessions.

Halo Effect

A cognitive bias in which an observer's overall impression of a person, company, brand, or product influences the observer's feelings and thoughts about that entity's character or properties.

Primacy Effect

The tendency for individuals to remember items at the beginning of a list better than items in the middle or at the end.