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Questions and Answers
What was the amount of cash received from customers based on the given sales and accounts receivable balance?
What is the total amount listed for interest expense?
What can be inferred about the operating cash expenses in relation to the cash received from customers?
What is the gross profit reported on the income statement?
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How much is the total operating expenses listed in the income statement?
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What amount of cash was paid for merchandise according to the example exercise?
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What is the amount of interest expense listed as other expense?
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If the accounts payable increased by $4,000, what impact does this have on cash payments for merchandise?
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What is the formula to calculate cash payments for merchandise when cost of merchandise sold, increase in inventories, and increase in accounts payable are known?
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How much gain was reported on the sale of land as other income?
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What is the income from operations reported on the income statement?
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What is the amount of depreciation used to reconcile net income to net cash flow from operating activities?
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What was the gain on the sale of land for Omni Corporation during the year?
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What is the net cash flow from operating activities for Omni Corporation?
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Which of the following adjustments would NOT be included in reconciling net income to net cash flow from operating activities?
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How much did Omni Corporation's patents decrease by between balance sheet dates?
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What effect does an increase in accumulated depreciation have on cash flow from operating activities?
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What effect does an increase in accounts receivable have on cash flows from operating activities?
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In the reconciliation process, which of the following is subtracted from net income?
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Which of the following correctly describes the impact of a decrease in accounts payable on cash flows from operating activities?
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How is net income adjusted when reconciling for amortization?
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What is the net cash flow from operating activities when accounting for the given adjustments to net income of $108,000?
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How does a decrease in inventory affect cash flows from operating activities?
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Which adjustment would NOT affect cash flows from operating activities?
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What is the total impact of an increase in accrued expenses on cash flows from operating activities?
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In the context of cash flow adjustments, how are increases in current operating liabilities classified?
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Which of the following statements about cash flow adjustments is accurate?
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What is the gross profit reported in the income statement?
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Which expense category does the amount of $7,000 represent?
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What is the total operating expenses reported in the income statement?
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What does free cash flow measure?
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Which amount represents the interest expense in the income statement?
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What is required when using the direct method for the statement of cash flows?
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What total amount was reported as 'Other income' from the gain on sale of land?
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What was the total sales amount reported in the income statement?
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Study Notes
Cash Flows from Operating Activities
- Net income of $108,000 signifying profit before adjustments.
- Adjustments:
- Depreciation adds back $7,000 as a non-cash expense.
- Gain on sale of land reduces cash flow by $12,000.
- Total net cash flow from operating activities calculated as $103,000 after adjustments.
Omni Corporation Financial Summary
- Accumulated depreciation increased by $12,000.
- Patents decreased by $3,400; no asset transactions recorded during the year.
- Net income of $50,000 adjusted by:
- Adding $12,000 depreciation.
- Adding $3,400 amortization.
- Subtracting $4,100 gain on sale of land.
- Final net cash flow from operating activities totals $61,300.
Changes in Current Operating Assets and Liabilities
- Increase in accounts receivable by $9,000 represents future cash inflow expectations, reduces cash flow.
- Decrease in inventory of $8,000 increases cash flow due to reduced inventory costs.
- Accounts payable decreased by $3,200, leading to reduced cash flow.
- Increase in accrued expenses by $2,200 boosts cash flow through delayed payments.
- Income taxes payable decreased by $500, indicating less cash retained.
Cash Received from Customers
- Sales reported were $350,000.
- Accounts receivable declined by $8,000 indicating cash collection surpasses sales.
- Total cash received from customers calculated at $358,000.
Cash Payments for Merchandise
- Total cost of merchandise sold reported as $790,000.
- Increase in inventories by $9,000 increases expenses.
- Accounts payable increased by $4,000 reduces required cash outflow.
- Total cash payments for merchandise determined at $150,000.
Cash Payments for Operating Expenses
- Total operating expenses are 203,000,consistingof203,000, consisting of 203,000,consistingof7,000 depreciation and $196,000 in other operating expenses.
- The calculation of expenses considers both fixed and variable costs associated with operations.
Statement of Cash Flows - Direct Method
- A reconciliation is essential when utilizing the direct method to ensure clarity in cash flow presentation.
Financial Analysis and Interpretation
- Free cash flow serves as a vital metric indicating available cash for corporate actions following necessary capital investments and dividend payments.
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Description
This quiz examines the cash flows from operating activities, including net income, depreciation, and adjustments for gains and losses. Participants will analyze the financial summaries of Omni Corporation to understand the impact of operating assets and liabilities on cash flow. Test your knowledge of essential cash flow adjustments and their effects on financial performance.
