Marchant Ltd reported the following abbreviated statement of financial position
Marchant Ltd. reported the following abbreviated statement of financial position and statement of earnings for 2016.
Required:
a. Prepare a statement of cash flows for Marchant Ltd. for the year ended December 31, 2016, using the indirect method.
b. Determine the cash flows from operating activities using the direct method.
c. Was the cash flow generated by the company’s operating activities during the year larger or smaller than the net income? Should these two amounts be the same? Explain.
d. Was the change in the amount of working capital during the year the same amount as cash from operating activities? Should these two amounts be the same? Explain. (Hint: Working capital 5 current assets 2 current liabilities.)
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