Asked by Thompson Stockmann on Jun 26, 2024
Verified
When using a spreadsheet to prepare the statement of cash flows,a decrease in accounts payable is entered in the Analysis of Changes columns with a debit in the statement of cash flows section and a credit in the balance sheet section.
Accounts Payable
The amounts owed by a business to its suppliers or creditors for goods and services received but not yet paid for.
Spreadsheet
A digital tool that organizes data in columns and rows, commonly used for calculations and data analysis.
Cash Flows
The complete volume of financial transactions entering and exiting a business, with a key effect on its financial fluidity.
- Identify the role of spreadsheets in preparing financial statements.
Verified Answer
ZK
Zybrea KnightJul 03, 2024
Final Answer :
False
Explanation :
In preparing a statement of cash flows, a decrease in accounts payable would be considered a use of cash (an outflow) in the operating activities section, not entered with a debit in the statement of cash flows section and a credit in the balance sheet section. The analysis typically involves adjusting net income for changes in balance sheet accounts to convert from accrual basis to cash basis accounting.
Learning Objectives
- Identify the role of spreadsheets in preparing financial statements.