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

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Question 1

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One factor that may cause cash flow from operations to differ from net income is the length of the ______________________________.

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Question 2

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Discuss operating, investing, and financing cash flows in relation to the various stages of the product life cycle.

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1. Operating cash flows begin negative i...

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Which of the following is a cash flow from operating activities?

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

A company in the growth phase of its product life cycle will normally have which of the following patterns 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:

The calculation of cash flow from operations under the indirect method involves two types of adjustments. Discuss each type of adjustment and provide an example of each type of adjustment.

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?

Under the ______________________________ of preparing the statement of cash flow's operating activities section firms list the cash flows from selling goods and services and then subtract the cash outflows to providers of goods and services.

The length of the operating cycle is another factor that may cause cash flow from operations to differ from __________________________________________________.

Interest expense and interest revenue would be classified as ____________________ activities in the statement of cash flows.

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

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

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 :

Which of the following transactions would not create a cash flow?

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

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

As products move through the maturity phase, companies invest to ___________ productive capacity.

Luke Corporation is a manufacturer of home furnishings. Selected financial information about Luke is listed below: · Borrowed $850,000 from a bank. Purchased equipment for $210,000 in cash. · Purchase investments for $285,000. · Received dividends of $51,000 from an investment in Davis Corp. · Paid dividends of $55,000. · Issued shares of preferred stock for $500,000. Repurchased outstanding common shares using $100,000 in cash. ·Purchased land for $100,000 cash. · Paid $36,000 interest expense on a bank loan. · Increased Inventories by $320,000 · Increased accounts receivable by $217,000. · Increased accounts payable $85,000. Use the above information to calculate Luke's: a. cash used or provided by investing activities b. cash used or provided by financing activities

One rationale for the statement of cash flows is to: