Podcast
Questions and Answers
What was the amount of cash received from customers based on the given sales and accounts receivable balance?
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 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 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?
What is the gross profit reported on the income statement?
Signup and view all the answers
How much is the total operating expenses listed in the income statement?
How much is the total operating expenses listed in the income statement?
Signup and view all the answers
What amount of cash was paid for merchandise according to the example exercise?
What amount of cash was paid for merchandise according to the example exercise?
Signup and view all the answers
What is the amount of interest expense listed as other expense?
What is the amount of interest expense listed as other expense?
Signup and view all the answers
If the accounts payable increased by $4,000, what impact does this have on cash payments for merchandise?
If the accounts payable increased by $4,000, what impact does this have on cash payments for merchandise?
Signup and view all the answers
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?
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?
Signup and view all the answers
How much gain was reported on the sale of land as other income?
How much gain was reported on the sale of land as other income?
Signup and view all the answers
What is the income from operations reported on the income statement?
What is the income from operations reported on the income statement?
Signup and view all the answers
What is the amount of depreciation used to reconcile net income to net cash flow from operating activities?
What is the amount of depreciation used to reconcile net income to net cash flow from operating activities?
Signup and view all the answers
What was the gain on the sale of land for Omni Corporation during the year?
What was the gain on the sale of land for Omni Corporation during the year?
Signup and view all the answers
What is the net cash flow from operating activities for Omni Corporation?
What is the net cash flow from operating activities for Omni Corporation?
Signup and view all the answers
Which of the following adjustments would NOT be included in reconciling net income to net cash flow from operating activities?
Which of the following adjustments would NOT be included in reconciling net income to net cash flow from operating activities?
Signup and view all the answers
How much did Omni Corporation's patents decrease by between balance sheet dates?
How much did Omni Corporation's patents decrease by between balance sheet dates?
Signup and view all the answers
What effect does an increase in accumulated depreciation have on cash flow from operating activities?
What effect does an increase in accumulated depreciation have on cash flow from operating activities?
Signup and view all the answers
What effect does an increase in accounts receivable have on cash flows from operating activities?
What effect does an increase in accounts receivable have on cash flows from operating activities?
Signup and view all the answers
In the reconciliation process, which of the following is subtracted from net income?
In the reconciliation process, which of the following is subtracted from net income?
Signup and view all the answers
Which of the following correctly describes the impact of a decrease in accounts payable on cash flows from operating activities?
Which of the following correctly describes the impact of a decrease in accounts payable on cash flows from operating activities?
Signup and view all the answers
How is net income adjusted when reconciling for amortization?
How is net income adjusted when reconciling for amortization?
Signup and view all the answers
What is the net cash flow from operating activities when accounting for the given adjustments to net income of $108,000?
What is the net cash flow from operating activities when accounting for the given adjustments to net income of $108,000?
Signup and view all the answers
How does a decrease in inventory affect cash flows from operating activities?
How does a decrease in inventory affect cash flows from operating activities?
Signup and view all the answers
Which adjustment would NOT affect cash flows from operating activities?
Which adjustment would NOT affect cash flows from operating activities?
Signup and view all the answers
What is the total impact of an increase in accrued expenses on cash flows from operating activities?
What is the total impact of an increase in accrued expenses on cash flows from operating activities?
Signup and view all the answers
In the context of cash flow adjustments, how are increases in current operating liabilities classified?
In the context of cash flow adjustments, how are increases in current operating liabilities classified?
Signup and view all the answers
Which of the following statements about cash flow adjustments is accurate?
Which of the following statements about cash flow adjustments is accurate?
Signup and view all the answers
What is the gross profit reported in the income statement?
What is the gross profit reported in the income statement?
Signup and view all the answers
Which expense category does the amount of $7,000 represent?
Which expense category does the amount of $7,000 represent?
Signup and view all the answers
What is the total operating expenses reported in the income statement?
What is the total operating expenses reported in the income statement?
Signup and view all the answers
What does free cash flow measure?
What does free cash flow measure?
Signup and view all the answers
Which amount represents the interest expense in the income statement?
Which amount represents the interest expense in the income statement?
Signup and view all the answers
What is required when using the direct method for the statement of cash flows?
What is required when using the direct method for the statement of cash flows?
Signup and view all the answers
What total amount was reported as 'Other income' from the gain on sale of land?
What total amount was reported as 'Other income' from the gain on sale of land?
Signup and view all the answers
What was the total sales amount reported in the income statement?
What was the total sales amount reported in the income statement?
Signup and view all the answers
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.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
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.
