Question

Prepare the cash flows from operating activities section of the statement of cash flows for Hawkeye Company using the direct method: What information or details are needed for this cash flow preparation?

Answer 1

To prepare the cash flows from operating activities section of the statement of cash flows using the direct method, you would need information such as net income, adjustments for non-cash items, and working capital changes.

Step-by-step explanation:

To prepare the cash flows from operating activities section of the statement of cash flows using the direct method, you would need the following information:

1. Net income: The starting point is the company's net income, which can be found on the income statement.
2. Adjustments for non-cash items: Add back any non-cash expenses such as depreciation and amortization.
3. Working capital changes: Consider changes in current assets and liabilities, such as accounts receivable, accounts payable, and inventory.

By analyzing these components, you can calculate the net cash provided by operating activities using the direct method.