ACC 291 Wk 5 Team Reflection

Apr 28th, 2015
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ACC 291 Wk 5 Team Reflection

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Week 5 Learning Team ReflectionACC/291When reviewing the information from week four and week five team B discovered how to prepare a statement of cash flows using both direct and indirect methods. We also discussed how to apply ratio, vertical, and horizontal analysis to financial statements. Next, we learned how to prepare journal entries associated with the issuance of preferred and common stocks and the declaration and payment of dividends. Then we conversed about how to identify situations that might lead to unethical accounting practices. Finally, we deliberated on the effect of unethical behavior and the Sarbanes-Oxley Act on financial statements. The statements of cash flows reports the cash receipts, payment and net change in cash resulting from operating, investing and financing activities (Weygandt, Kimmel, Kieso, 2010). A company must convert net income from accrual basis to cash basis, it can be converted using the direct or indirect method (Weygandt, Kimmel, Kieso, 2010). Both methods however have the same end results. The indirect method adjusts only the items that do not affect cash. The indirect method is the most common used in companies. The direct method uses operating cash receipts and payments. The direct method is more favorable with FASB (Weygandt, Kimmel, Kieso, 2010).Using the indirect method to prepare a statement of cash flows has three steps. Step 1 determines the net cash used in operating activities by converting the a

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