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1O - -
2I + - An operating activity may increase cash but not profit since
3I + + some operating activities are for credit. By using accrual
4I - NE system, income will change without receiving or paying cash.
Cash will increase when there is a collection from credit
5F - NE customers but the corresponding entry for revenue has been
6 O/F - - entered through sale and receivable.
7O NE +
8O - NE
9F NE NE
10 O - NE
11 O + +
12 O NE -
13 I + +
14 I + +
15 F + NE
16 F - NE
17 O + NE
18 O + +
ut not profit since
y using accrual
ving or paying cash.
on from credit
or revenue has been
DIATESSARON INC.
Statement of Cash Flows
For Year Ended December 31, 2014
TAKING IT FURTHER
It is necessary to know that Accounts Payable is used for purchases of inventory when using
the direct method because this affects the computation of cash payments for merchandise.
Chen Chuan
Net Sales 1,849,035 539,038
Cost of goods sold 1,060,490 57.35% 338,006 62.71%
Gross Profit 788,545 42.65% 201,032 37.29%
Operating expenses 502,275 27.16% 89,000 16.51%
Profir from operations 286,270 15.48% 112,032 20.78%
Interest expense 6,800 0.37% 1,252 0.23%
Profit before income tax 279,470 15.11% 110,780 20.55%
Income tax expense 83,841 4.53% 27,695 5.14%
Profit 195,629 10.58% 83,085 15.41%
SCHWENKE CORPORATION
Income Statement
Year Ended December 31, 2014
Assets
Current assets
Cash 7,500
Accounts receivable
Inventory
Total current assets
Property, plant, and equipment
Total assets
Liabilities
Current liabilities
Non-current liabilities 120,000
Total liabilities
Shareholders' Equity
Common shares 250,000
Retaine earning 400,000
Total shareholders' equity 650,000
Total liabilities and shareholders' equity