Question

Prepare the operating activities section of the statement of cash flows using the direct method for Video Phones, Incorporated.

Answer 1

The operating activities section of the statement of cash flows using the direct method for Video Phones, Incorporated can be prepared by analyzing the cash inflows and outflows directly related to the company's core operations.

Step-by-step explanation:

The operating activities section of the statement of cash flows using the direct method for Video Phones, Incorporated can be prepared by analyzing the cash inflows and outflows directly related to the company's core operations.

Here are the steps to prepare the operating activities section using the direct method:

1. Start with the net income of the company, which can be found in the income statement.
2. Add back any non-cash expenses, such as depreciation and amortization.
3. Adjust for changes in current assets and current liabilities by calculating the changes in accounts receivable, inventories, accounts payable, and other operating liabilities.
4. Consider any other non-operating items, such as gains or losses from the sale of assets, interest income, or interest expense.
5. Sum up all the adjustments to arrive at the net cash provided by operating activities.

By following these steps, you will be able to prepare the operating activities section of the statement of cash flows using the direct method for Video Phones, Incorporated.