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Amortization requires the use of cash. 42) The rationale for adding amortization to net i

Amortization requires the use of cash. 42) The rationale for adding amortization to net i

Amortization requires the use of cash.

 

42) The rationale for adding amortization to net income is that cash was paid out.

43) Amortization is shown only when using the indirect method of preparing a statement of cash flow.

 

44) The indirect method shows the cash received from customers in the cash flows from operating activities.

 

45) There are two alternative ways to prepare a cash flow statement—direct and indirect methods.

 

 

 

46) The following information is given for Tripp Company, which uses the indirect method.

 

Net income$20,000

Amortization expense3,000

Increase in accounts receivable2,000

Payment of dividends2,000

Proceeds from sale of equipment6,000

Increase in accounts payable4,000

Decrease in inventory3,000

 

From the information provided, answer the following questions:

 

a. The cash flow from operating activities is ______________.

b. The cash flow from investing activities is ______________.

c. The cash flow from financing activities is ______________.

Tripti 07-Dec-2019

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