Exam 3: Income Flows Versus Cash Flows: Understanding the Statement of Cash Flows

Cash flows from ____________________ activities will normally be negative during the introduction and growth phase of the product life cycle.

Which of the following is an adjustment that would need to be made to net income when calculating cash flows from operations under the indirect method?

Krenzer,Inc.,a financial company,reported income tax expense of $2,648 million for 2010,comprising $2,346 million of current taxes and $302 million of deferred taxes.The balance sheet showed income taxes payable of $222 million at the beginning of 2010 and $427 million at the end of 2010.Compute the amount of income taxes paid in cash during 2010.

Under the _________________________,firms begin with net income to calculate cash flow from operations for the period.

Cash collected from customers would appear in the operating activities section of a statement of cash flows prepared using the ____________________ method

Which statement is false regarding the preparation of the indirect method of the statement of cash flows? 

Adophus,Inc.'s 2010 income statement reported total revenues of $850,000 and total expenses (including $40,000 depreciation)of $720,000.The 2010 balance sheet reported the following: accounts receivable beginning balance of $50,000 and ending balance of $40,000;accounts payable beginning balance of $22,000 and ending balance of $28,000.Therefore,based only on this information and using the indirect method,the 2010 net cash inflow from operating activities was 

Outback Corp.recorded sales of $1,300,000 in 2010,in addition the company's accounts receivable balance grew from $120,000 at the beginning of 2010 to $165,000 at the end of 2010.How much cash did Outback collect from customers in 2010?

Normally,cash flows from operations will peak during which phase of the product life cycle?

For the following types of companies,discuss whether you think their cash flows from operations,investing,and financing will be positive (the activity provides cash)or negative (the activity uses cash).Provide support for your answer. 1.Tech Corporation is a developer of computer software for the gaming industry.The company recently launched its first software title.The company is expanding its operations by hiring additional developers and administrative staff.The company is not yet profitable,but expects to break even within two years.Investors view it as having a first mover advantage and have been happy to invest in the company. 2.Midwest Corporation is a supplier to the agricultural industry.The company is experiencing its 25th year of profitability,but is concerned that sales have contracted for the fifth year in a row.Midwest prides itself in paying dividends and having no debt on its balance sheet. 3.Semi Inc.manufactures semiconductors.The company has just introduced its ninth new product and is the leader in market share for the industry.The company continues to invest in research and development and expand by purchasing competitors.The company has yet to pay dividends,but is considering it in the future.The company's largest current asset is cash,due to its high profit margin.

The payment of dividends would be classified as ____________________ activities in the statement of cash flows.

Norton Company reported total sales revenue of $55,000,total expenses of $45,000,and net income of $10,000 on its income statement for the year ended December 31,2010.During 2010,accounts receivable increased by $4,000,merchandise inventory increased by $6,000,accounts payable decreased by $2,000,and depreciation of $18,000 was recorded.Therefore,based only on this information,the net cash flow from operating activities using the indirect method for 2010 was: 

A cash inflow from financing activities includes: 

If a firm is growing and expanding its accounts receivable and inventories faster than its current operating liabilities its cash flow from operation will normally be

Selected financial statement information for Filmco appears below: Balance Sheet accaunts Jan. 1, 2010 Dec. 31, 2010 Inventary \ 210,000 \ 85,000 Accounts Receivable \ 90,000 \ 45,000 Calculate the amount of cash collected from customers and the amount of cash spent on inventory for 2010 by Filmco.

____________________ ___________________ equals current assets minus current liabilities

The acquisition of new investments would be classified as ____________________ activities in the statement of cash flows.

Many analysts use ____________________ as a crude measure of a firm's ability to pay down debt.

Krenshaw Company reported total sales revenue of $80,000,total expenses of $72,000,and net income of $8,000 for the year ended December 31,2009.During 2009,accounts receivable increased by $3,000,merchandise inventory decreased by $2,000,accounts payable increased by $1,000,and $5,000 in depreciation expense was recorded.Assuming no other adjustments to net income are needed,the net cash inflow from operating activities using the indirect method was 

Plano Corporation presented the following account balances for 2010 and 2009: Additional information: 1.Cash dividends of $20,000 were declared on December 15,2010,payable on January 15,2011. 2.The company issued 70,000 shares of $1 par value common stock during 2010. 3.The company repurchased 34,000 shares of its own common stock during the period.No treasury stock was sold during the period. 4.Additional equipment was purchased by issuing a $100,000 long-term note payable. Required: 1.Prepare the financing section of Plano's 2010 statement of cash flows. 2.Indicate if any of the events will be reported as a significant noncash transaction.