The comparative balance sheet of Hi Tech, Inc. show a net decrease? :TG.YnotDo Answers

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Question by VIcki K: The comparative balance sheet of Hi Tech, Inc. show a net decrease?
The comparative balance sheet of Hi Tech, Inc. show a net decrease in unexpired insurance of $ 500.00 and a net decrease in interest payable of $ 350. In order reconcile net income with net cash flow from operating activities, net income shoule be?

Best answer:

Answer by srevalsan
===some presumptions required for the answer

1.–the unexpired Insurance (not clear on which side of
Balance sheet )
a-
since from the name Hitech the main activity is not

insurance it should be on liability side as collected from
customers for continued technical support for a fixed term
b-

and that the term has not expired and so not taken as
income and shown in Balance sheet of previous period

c-
and that during that particular period under consideration
$ 500 has been credited to Profit and loss account as
income for the period since during the period for the
technical support deposit (Insurance ) is completed as per
support contract

net income (P&L account) xxxxx

less
insurance receipt of which was in
previous period $ 500

Cash Inflow (xxxx (-) $ 500)

Interest Payable was decreased $ 350
It is a liability which was written off in previous period
It did not enter current P&L a.c. in current period
So to reconcile Cash flow with Profits
JUST Add the figure to Profit as per P&L account

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The comparative balance sheet of Hi Tech, Inc. show a net decrease?

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