| Course | AC116 Accounting II |
|---|---|
| Unit | Unit 10 |
| Paper type | Statement of cash flows |
| Length | About 620 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Accounting |
| Updated | October 2026 |
Free sample paper for AC116 Unit 10
Back to the Cash It Moved: A Unit 10 Indirect-Method Statement of Cash Flows for an Orchard Supply Distributor
[Student Name]
Purdue University Global
AC116: Accounting II
Unit 10 Cash Flow Statement
[Instructor Name]
[Date]
Ridgeline Orchard Supply, Inc. and its year's figures are composite; the cash flow standard, textbook and accruals study cited are real.
Statement of Cash Flows
Ridgeline Orchard Supply, Inc. Statement of Cash Flows For the Year Ended December 31
Cash flows from operating activities Net income: $84,000. Adjustments to reconcile net income to net cash provided by operating activities:
1. Depreciation expense: plus $31,500.
2. Amortization of discount on bonds payable: plus $1,772.
3. Loss on disposal of equipment: plus $2,200.
4. Increase in accounts receivable, net: minus $6,500.
5. Increase in merchandise inventory: minus $14,300.
6. Decrease in prepaid expenses: plus $1,200.
7. Increase in accounts payable: plus $9,800.
8. Increase in payroll liabilities: plus $1,100.
Net cash provided by operating activities: $110,772.
Cash flows from investing activities
1. Proceeds from sale of delivery truck: $16,500.
2. Purchase of forklift, cash portion: minus $41,800.
3. Construction of cold-storage warehouse: minus $512,000.
Net cash used by investing activities: minus $537,300.
Cash flows from financing activities
1. Proceeds from issuance of bonds payable: $479,209.
2. Repayment of note payable: minus $24,000.
3. Dividends paid: minus $40,000.
Net cash provided by financing activities: $415,209.
Net decrease in cash: $110,772 minus $537,300 plus $415,209 equals minus $11,319. Cash, January 1: $62,400. Cash, December 31: $51,081, which agrees with the balance sheet.
Noncash investing activity: the old forklift, with a fair value of $4,200, was traded toward the $46,000 cost of the new forklift.
Why Each Adjustment Is There
Depreciation and the disposal losses lowered reported profit, yet no money left the bank for either, which is why both return to net income here. The loss on the truck, the traded forklift and the retired racking came to $2,200; the cash from the truck sale appears in full under investing, where it belongs (Financial Accounting Standards Board, 1987). The bond discount amortization of $1,772 is added back because the first period's interest expense was $16,772 while only $15,000 was paid in cash.
The adjustments for receivables, inventory and payables translate accrual figures into cash: Ridgeline sold more on credit than it collected, bought more bins and wire than it sold, and paid suppliers more slowly than it bought.
An increase in a current asset is subtracted, because cash went into it, and an increase in a current liability is added, because cash that would have left stayed in the business (Franklin et al., 2019).
Reading the Year
Operations produced $110,772, more than net income, mainly because depreciation is large in a business with a warehouse, trucks and forklifts. That cash, plus nearly $480,000 of bond proceeds, paid for a $512,000 warehouse, a forklift, a loan repayment and dividends, and cash still fell only $11,319. Research has shown that accrual earnings usually describe a year's performance better than cash flows do, but cash flows reveal how that performance is funded (Dechow, 1994). Here, the statement shows a company that funds its operations comfortably and borrowed to fund growth. A lender would want to see whether operating cash of about $110,000 a year can cover the $30,000 of annual bond interest, which it can more than three times over, and eventually help repay the $500,000 face value.
Checks
1. Operating, investing and financing subtotals sum to the change in cash.
2. Ending cash agrees with the balance sheet.
3. The truck proceeds, not the loss, appear under investing.
4. The forklift trade-in is disclosed as noncash, and only the $41,800 paid in cash is an investing outflow.
References
Dechow, P. M. (1994). Accounting earnings and cash flows as measures of firm performance: The role of accounting accruals. Journal of Accounting and Economics, 18(1), 3-42. https://doi.org/10.1016/0165-4101(94)90016-7
Financial Accounting Standards Board. (1987). Statement of cash flows (Statement of Financial Accounting Standards No. 95). https://www.fasb.org
Franklin, M., Graybeal, P., & Cooper, D. (2019). Principles of accounting, volume 1: Financial accounting. OpenStax. https://openstax.org/details/books/principles-financial-accounting
What the AC116 Unit 10 assignment asks for
The final AC116 unit asks for a statement of cash flows, usually by the indirect method, from two balance sheets, an income statement and notes. Head the statement with the company name, its title and the year covered. Start operating activities at net income, add back noncash expenses such as depreciation and discount amortization, remove gains or add back losses on disposals, and adjust for each change in current assets and current liabilities. Report full proceeds from asset sales and cash spent on new assets under investing. Report borrowing, repayments and dividends under financing. Sum the three sections, reconcile to the change in cash and check ending cash against the balance sheet. Disclose noncash investing and financing events separately. Expect two pages. Cite the standard and textbook in APA 7.
How this AC116 Unit 10 example is built
The sample presents the statement under a three-line heading. Operating activities start at $84,000 and list eight adjustments, from depreciation of $31,500 to a $1,100 rise in payroll liabilities, reaching $110,772. Investing lists three items totaling an outflow of $537,300, and financing three items totaling an inflow of $415,209. The net decrease reconciles to ending cash. A noncash note covers the trade-in. A section explains each adjustment, and the highlighted sentence translates the working capital changes into plain terms. A reading of the year cites accruals research and shows operating cash covering bond interest more than three times. Four checks close the statement.
AC116 Unit 10 rubric: what earns full points
Cash flow statements are graded on correct classification, correct signs and a total that reconciles to the balance sheet. Each adjustment to net income must have the right direction, and graders check working capital changes closely. Gains and losses on disposals must be removed from operating activities while the full proceeds appear in investing. Bond discount amortization must be added back. The noncash schedule is often a separate rubric item. A correct heading and clear sections count for format. Interpretation of what the statement shows earns additional credit. Accurate arithmetic earns most of what remains, and correctly cited sources, the cash flow standard and the textbook in APA 7, close the rubric.
Common AC116 Unit 10 mistakes, and how to avoid them
The most frequent cash flow error is reversing the sign on working capital changes, adding an increase in receivables instead of subtracting it. Others report the loss or gain on a sale under investing instead of the proceeds. Depreciation is subtracted. Bond discount amortization is ignored. Dividends declared but unpaid are reported as paid. The trade-in's noncash portion is counted as cash spent. Ending cash does not match the balance sheet, which tells the grader an adjustment was missed, yet many students submit anyway without hunting for it. If your balance sheets and income statement are ready and the statement will not reconcile, a writer can prepare it with every adjustment explained.
Get an AC116 Unit 10 example written to your instructions
Everything the statement needs sits in the problem Unit 10 supplies: both balance sheets, the income statement and the notes on equipment, bonds and dividends. Attach those to the instructions and rubric. The working papers and statement come back inside 24-48h, proved to cash, and a first custom sample is free. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
More AC116 papers and BS in Accounting samples
- AC116 Unit 1: Inventory Cost Methods Post
- AC116 Unit 2: Receivables Write-Off and Recovery
- AC116 Unit 3: Aging and Allowance Estimate
- AC116 Unit 4: Inventory Costing Comparison
- AC116 Unit 5: Depreciation Schedule, Three Methods
- AC116 Unit 6: Asset Disposal Problem
- AC116 Unit 7: Payroll Register Exercise
- AC116 Unit 8: Bond Amortization Schedule
- AC116 Unit 9: Seminar Reflection on an Estimate
- AC114 Unit 10: Comprehensive Merchandising Cycle
- AC112 Unit 10: Management Report on a Second Location
AC116 Unit 10 questions, answered
Why is the change in receivables taken net of the allowance?
Because bad debt expense reduced net income without any cash leaving, and the allowance that rose with it sits inside the net receivable. Using the change in net receivables captures both effects in one line, which is how most AC116 problems expect it. Subtracting the gross change while also adding back bad debt expense needs extra care, and the sample avoids mixing the two.
Why is bond discount amortization added back?
Because it raised interest expense without any cash leaving. The cash paid for interest is the stated rate times face; the expense recorded was higher by the amount of discount amortized. Adding that difference back restores operating cash to what actually moved. A premium works the other way, and its amortization is subtracted, since the cash paid exceeded the expense recorded.
What goes in the noncash schedule?
Investing and financing events that moved no cash but changed the balance sheet, such as equipment bought by signing a note or bonds converted into stock. They are left out of the three sections, since no cash moved, and reported beneath the statement so a reader still sees the transaction. Problems in this unit often include one to test exactly that placement.
Where can I find a free AC116 Unit 10 sample paper?
This page holds a complete AC116 Unit 10 indirect-method cash flow statement for Ridgeline, reconciling net income to cash and disclosing a noncash trade-in.
Why does operating cash exceed net income in the AC116 Unit 10 sample?
Depreciation of $31,500, disposal losses of $2,200 and bond discount amortization of $1,772 reduced net income without using cash. Together they outweigh the cash tied up in more receivables and inventory.