Did the balance in the account increase or decrease this year? Did the transactions in this account result in more income (revenue or expense) or cash flows (cash received or cash paid)? . Given the data shown, does this reconciling item contain any 'red flag' risks about the quality of this year's earnings? Explain. What is your overall assessment of the risk for the item? Statement of Cash Flows: OCF Net income $ 223,000 add back Depreciation expense add back Loss on sale of investment 36,000 6,000 change in Accounts receivable change in Inventory change in Accounts payable change in Unearned revenue change in Salaries payable change in Taxes payable (34,800) (14,000) (22,000) (10,000) (3,600) 7,200 IMPORTANTI These values do NOT tell you whether the changes in these balances were increases or decreases. They tell you whether the change in each balance affected NI > OCF or OCF > NI. Cash flows from operating activities $ 187,800 For each of the 4 items highlighted on the NIOCF reconciliation shown on the following slide, prepare answers to each of the following questions. Did the balance in the account increase or decrease this year? Did the transactions in this account result in more income (revenue or expense) or cash flows (cash received or cash paid)? . Given the data shown, does this reconciling item contain any 'red flag' risks about the quality of this year's earnings? Explain. What is your overall assessment of the risk for the item? Statement of Cash Flows: OCF Net income $223,000 add back Depreciation expense add back Loss on sale of investment 36,000 6,000 change in Accounts receivable change in Inventory change in Accounts payable change in Unearned revenue change in Salaries payable change in Taxes payable (34,800) (14,000) (22,000) (10,000) (3,600) | 7,200 IMPORTANT! These values do NOT tell you whether the changes in these balances were increases or decreases. They tell you whether the change in each balance affected NI > OCF or OCF > NI. Cash flows from operating activities $ 187,800