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Interpreting Cash Flow from Operating Activities Carter Companys income statement and cash flow from operating activities (indirect method) are provided as follows ($ thousands): Income
Interpreting Cash Flow from Operating Activities Carter Companys income statement and cash flow from operating activities (indirect method) are provided as follows ($ thousands):
Income statement | |
---|---|
Revenue | $400 |
Cost of goods sold | 215 |
Gross profit | 185 |
Operating expenses | 110 |
Operating income | 75 |
Interest expense | 25 |
Income before taxes | 50 |
Income tax expense | 15 |
Net income | $35 |
Cash flow from operating activities | |
---|---|
Net income | $35 |
Plus depreciation expense | 70 |
Operating asset adjustments | |
Less increase in accounts receivable | (25) |
Less increase in inventories | (50) |
Less increase in prepaid rent | (5) |
Plus increase in accounts payable | 65 |
Plus increase in income tax payable | 5 |
Cash flow from operating activities | $95 |
For each of the four statements below, determine whether the statement is true or false. If the statement is false, provide the (underlined) dollar amount that would make it true.
Amount to | ||
---|---|---|
True or False | make True | |
1. Carter collected $375 from customers in the current period. | AnswerTRUEFALSE
| $Answer
|
2. Carter paid $0 interest in the current period. | AnswerTRUEFALSE
| Answer
|
3. Carter paid $20 in income taxes in the current period. | AnswerTRUEFALSE
| Answer
|
4. If Carter increased the depreciation expense by $50, it would increase its cash from operations by $50. | AnswerTRUEFALSE
| Answer |
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