I'm having problems with the overall steps to answering an adjustment using the Indirect Method of accounting.
I understand that Operating functions of a business, A/R, A/P, INV, Prepaid rent, Income payable/Interest Payble, Wage Payable etc all have to be adjusted after finding the change. EX. An increase from year 1-2 of 3,000 would mean a decrease of 3,000 on the adjustment.
However What i'm trying to figure out here is deciding where the given information fits into the adjustment.
EX// I was given, "Dividends of 7,000 were declared/paid, New plant assets purchased for 195,000 in cash. Land was also purchased for cash. Plant assets were sold for 25,000 cash. Additional stock was issued for cash, and a portion of the bank loan was repaid.
Now* Dividends would be a form of Financing activity = -7000, -195,000 cash for purchase of asset (investing?), now for the unnamed amounts would you just look at the Balance sheet?
Thanks for any help.
2007-08-09
08:45:38
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1 answers
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