Effects of Brinker International’s Current Liabilities on Its Statement of Cash Flows Brinker International operates Chili’s, Macaroni Grill, and other restaurant chains.

The following items are classifi ed as current liabilities on Brinker International’s balance sheets as of June 25, 2008, and June 27, 2007:

(In thousands)

2008 2007 Current Liabilities:

Current installments of long-term debt $ 1,973 $ 1,761 Accounts payable 168,619 167,789 Accrued liabilities 331,943 330,031 Income taxes payable 5,946 21,555 Liabilities associated with assets held for sale 17,688 22,328 Total current liabilities 526,169 543,464 Required 1. Brinker uses the indirect method to prepare its statement of cash fl ows. Prepare the Operating Activities section of the cash fl ow statement, which indicates how each item will be refl ected as an adjustment to net income.

2. Explain why an increase in a current liability account such as Accounts Payable appears as a positive amount on the statement of cash fl ows.

AppendixLO1