acc 230 prepare a statement of cash flows for Little Bit Inc.
To prepare a statement of cash flows for Little Bit Inc., you will need the company's financial statements, specifically the balance sheet and income statement for the relevant period. The statement of cash flows provides information about the cash inflows and outflows of a company during a specified period, categorizing them into three main sections: operating activities, investing activities, and financing activities.
Here's a step-by-step guide to prepare the statement of cash flows for Little Bit Inc.:
1. Begin with the Operating Activities section:
a. Start by analyzing the company's net income from the income statement.
b. Adjust the net income for any non-cash expenses, such as depreciation and amortization.
c. Consider any changes in working capital accounts (current assets and liabilities) by comparing the beginning and ending balances.
d. Adjust for any gains or losses on the sale of assets.
e. Sum up all the adjustments to net income to calculate the net cash provided by operating activities.
2. Move on to the Investing Activities section:
a. Identify any cash inflows from the sale of long-term assets, such as property, plant, and equipment.
b. Note any cash outflows related to the purchase of long-term assets.
c. Calculate the net cash used in investing activities by subtracting the cash outflows from the cash inflows.
3. Proceed to the Financing Activities section:
a. Note any cash inflows from issuing debt (e.g., loans, bonds) or equity (e.g., issuing shares).
b. Consider any cash outflows related to the repayment of debt or equity dividends.
c. Calculate the net cash provided by or used in financing activities by subtracting the cash outflows from the cash inflows.
4. Finally, summarize the net cash provided/used in each section to calculate the overall change in cash during the period. Add this to the beginning cash balance to determine the ending cash balance.
It's important to note that this process requires a thorough understanding of the company's financial statements and transactions. Additionally, you might need to consult with an accounting professional or refer to accounting software to ensure accuracy and compliance with accounting standards (such as Generally Accepted Accounting Principles - GAAP).
Make sure to have all the necessary financial information at hand before attempting to prepare the statement of cash flows.