Use the indirect method to determine cash flows from operating activities
An accountant for Farve Enterprise Companies (FEC) computed the following information by making comparisons between FEC's 2012 and 2011 balance sheets. Further information was determined by examining the company's 2012 income statement.
1. The amount of cash dividends paid to the stockholders.
2. The amount of an increase in the balance of an Unearned Revenue account.
3. The amount of a decrease in the balance of an Inventory account.
4. The amount of a decrease in the balance of a Land account.
5. The amount of an increase in the balance of a Prepaid Rent account.
6. The amount of an increase in the balance of a Treasury Stock account.
7. The amount of a decrease in the balance of the Accounts Receivable account.
8. The amount of a gain arising from the sale of land.
9. The amount of an increase in the balance of the Salaries Payable account.
10. The amount of an increase in the balance of the Bonds Payable account.
11. The amount of depreciation expense shown on the income statement.
Required
For each item described above, indicate whether the amount should be added to or subtracted from the amount of net income when determining the amount of net cash flow from operating activities using the indirect method. If an item does not affect net cash flow from operating activities, identify it as being not affected.
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