part 1.formulas for cash flows - accrual to cash

Question 1

cash paid to suppliers

Answer 1

1. calculate cost of purchases:cost of goods sold + increase in inventory
   or
   cost of goods sold - decrease in inventory
   or
   beg. inventory + purchases - ending inventory = cost of goods sold
2. cost of purchases + decrease in accounts payable
   or
   cost of purchases - increase in accounts payable

Question 2

cash paid for operating expenses

Answer 2

operating expenses (excluding depreciation expense) + increase in prepaid expenses - increase in wages payable + decrease in accrued expenses

 or

operating expenses (excluding depreciation expense) - decrease in prepaid expenses + decrease in wages payable - increase in accrued expenses

Question 3

cash paid for income taxes

Answer 3

income tax expense + decrease income tax payable

       or income tax expense - increase income tax payable

Question 4

cash paid for interest

Answer 4

interest expense + decrease in interest payable
or
interest expense - increase in interest payable

Question 5

notes payable repayments

Answer 5

beg. balance notes payable + additional loans - ending balance notes payable

Question 6

proceeds from stocks

Answer 6

beg. balance common stock + issuance of stock - end. balance

Question 7

cash payments of dividends

Answer 7

beg. retained earnings + net income - end. retained earnings

(remember that: end retained earnings = beg. ret. earn. + net income - dividends paid

Question 8

investing activities in cash flows

Answer 8

analyze long-term assets

Question 9

financing activities in cash flows

Answer 9

analyze long-term liabilities accounts and stockholders equity accounts

Question 10

operating activities in cash flows

Answer 10

current assets and liabilities account in generating net income

Question 11

cash received from customers

Answer 11

sales + decrease in a/r
or
sales - increase in a/r