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

Bankers Company reported net income of $40,000,which included depreciation expense and depletion expense of $21,000 and $18,000,respectively.The following changes also occurred during 2010: Required: Calculate cash flows from operating activities.

The financial statements for Warren Company show the following: Cost of goods sold $725,000 Based on this information,cash paid for merchandise was:

When net income is high relative to operating cash flows,we describe the firm as having recorded:

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.

Which of the following statements about the statement of cash flows is correct?

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

While preparing a statement of cash flows,you encountered the following transaction: February 1,2011: Galvinize Corporation acquired a small office building in exchange for 5,000 shares of its own common stock;par value $10 per share;market value $15 per share. A.Should this transaction be shown on the statement of cash flows? B.Why or why not?

What is working capital from operations? Discuss what types of firms will have similar net income and working capital from operations? For which types of firms will net income and working capital from operations be significantly different?

J.Jill is a women's clothing retailer.The company started as a mail order company and has expanded into mall department stores.The company now receives approximately half of its revenues from mail order and half from retail outlets.Over the time period 2010 to 2012,sales increased approximately 25%. Discuss the relationship between net income,working capital from operations,and cash flow from operations,and between cash flows from operating,investing,and financing activities over the three-year period.

Normally,cash flows from financing will start using cash during which phase of the product life cycle?

When preparing the statement of cash flows using the indirect method,an increase in accounts payable would appear as:

When preparing the statement of cash flows using the indirect method,the payment of dividends would appear as:

All of the following are firms that may experience a long lag between the expenditures of cash and the receipt of cash from customers,except:

When preparing the statement of cash flows using the indirect method,an increase in inventories would appear as:

Firms with short operating cycles will experience less of a lag between the creation and delivery of their products and the collection of cash from customers because:

Tinker Company reported sales revenue of $500,000 and total expenses of $450,000 (including depreciation)for the year ended December 31,2010.During 2010,accounts receivable decreased by $5,000,merchandise inventory increased by $4,000,accounts payable increased by $6,000,and depreciation expense of $10,000 was recorded.Assuming no other data is needed and using the indirect method,the net cash inflow from operating activities for 2010 was:

The receipt of cash when employees exercise stock options is a(n)____________________ activity.

The issuance of debt would be classified as a(n)____________________ activity in the statement of cash flows.

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

When preparing the statement of cash flows using the indirect method,the sale of marketable securities would appear as: