A firm reported the following in its 2011 financial statements: $\begin{array} { | l | l | l | }
\hline \text { Balance sheet } & \text { Dec. 31/2010 } & \text { Dec. 31.2011 } \
\hline \text { Unearned rent } & \$ 10,000 & \$ 17,000 \
\hline
\end{array}$Income statement
Rent revenue = $92,000
(a) Describe the required disclosure implied by the above information for the indirect method Statement of Cash Flows for 2001, including the reconciliation of net income and net operating cash flow.
(b) Explain as completely as possible the reasoning for your response in (a).
(c) Describe the required disclosure implied by the above information for the direct method Statement of Cash Flows for 2011, omitting any reference to the reconciliation of net income and net operating cash flow.

Question

A firm reported the following in its 2011 financial statements: $\begin{array} { | l | l | l | } 
\hline \text { Balance sheet } & \text { Dec. 31/2010 } & \text { Dec. 31.2011 } \
\hline \text { Unearned rent } & \$ 10,000 & \$ 17,000 \
\hline
\end{array}$Income statement
Rent revenue = $92,000
(a) Describe the required disclosure implied by the above information for the indirect method Statement of Cash Flows for 2001, including the reconciliation of net income and net operating cash flow.
(b) Explain as completely as possible the reasoning for your response in (a).
(c) Describe the required disclosure implied by the above information for the direct method Statement of Cash Flows for 2011, omitting any reference to the reconciliation of net income and net operating cash flow.

Quizplus · Accepted Answer

The Answer of A firm reported the following in its 2011 financial statements: $\begin{array} { | l | l | l | } 
\hline \text { Balance sheet } & \text { Dec. 31/2010 } & \text { Dec. 31.2011 } \
\hline \text { Unearned rent } & \$ 10,000 & \$ 17,000 \
\hline
\end{array}$Income statement
Rent revenue = $92,000
(a) Describe the required disclosure implied by the above information for the indirect method Statement of Cash Flows for 2001, including the reconciliation of net income and net operating cash flow.
(b) Explain as completely as possible the reasoning for your response in (a).
(c) Describe the required disclosure implied by the above information for the direct method Statement of Cash Flows for 2011, omitting any reference to the reconciliation of net income and net operating cash flow.

A Firm Reported the Following in Its 2011 Financial Statements