ABC Company
Income Statement (Cash basis)
For the Year ended December 31, 2018
Sales revenues		$22,000
Expesnse:
Rent expense	$3,500
Advertising expense	600
Wages expense	1,400
Insurance expense	1,650
Total expenses		7,150
Net Income		$14,850

Deferral /Accrual Items
Sales on account (AR)	2000
Unearned Revenue	1600
Prepaid Rent Expense	500
Accrued Advertising Expense	350
Prepaid Insurance	250
Accrued wages expense	400
Gain on sale of equipment	1200
Depreciation expense	600

ABC Company
Income Statement (Accrued basis)
For the Year ended December 31, 2018
Sales revenues
Gain on sale of equipment
Total Revenues
Expesnse:
Rent expense
Advertising expense
Insurance Expense
Wages expense
Depreciation Expense
Total Expenses
Net Income

How can we find net cash provided or used in operating activities? Answer the following questions based on the accrual income statement (GAAP) Operating Activities showing the Direct Method How much cash was deposited in the bank from revenues for 2018? How much cash was deposited in the bank from gain on sale of equipment for 2018? How much cash was paid out for rent in 2018? How much cash was paid out for advertising in 2018? How much cash was paid out for wages in 2018? How much cash was paid out for Insurance in 2018? How much cash was paid out for Depreciation Expense in 2018? What is the net cash balance at the end of 2018? Why was depreciation zero? Why was the gain on sale of equipment zero? Answer the following questions based on the accrual income statement (GAAP) Find Operating Activities by adjusting net income - Indirect Method Net Income (Accrual Basis) Adjust net income for items not requiring or using cash: Increase in accounts receivable Increase in Prepaid Rent Expense Increase in advertising payable Increase in wages payable Increase in Prepaid Insurance Increase in Unearned Revenue Gain on sale of equipment Depreciation expense Total cash used in operations Net cash inflows Why was depreciation a positive $600? Why was the gain on sale of equipment a negative $1200?