Q14-11RQ - Horngren'S Financial And Managerial Accounting

Question

Question: What accounts on the balance sheet must be evaluated when completing the investing activities section of the statement of cash flows?

Step-by-Step Solution

Answer

Answer

 

Investing activity records transactions related to long-term assets and long-term note receivables.

Step 1: Evaluating T-accounts of long-term assets

While computing cash generated from or used for investing activities it is important to evaluate the T-accounts of each long-term asset. Always remember that accumulated depreciation should be adjusted in operating activities only.

Step 2: Evaluating T-accounts of long-term note receivables

Long-term note receivables are also adjusted in cash flow from investing activities.