Principles Of accounting

SATELLITE 2010 Worksheet for a Statement of Cash Flows For the Year Ended December 31, 2007 Effects of Transactions Balance sheet effects: Beginning Debit Credit Ending Balance Changes Changes Balance Assets Cash and cash equivalents (x ) Accounts receivable Plant and equipment (net of accumulated depreciation) (2) Totals Liabilities & Stockholders' Equity Note payable (short-term) Accounts payable Accrued expenses payable Notes payable (long-term) Capital stock (no par value) Retained earnings Totals Cash effects: Sources Uses Operating activities: Net income Depreciation expense Increase in accounts receivable (3) Increase in accounts payable Decrease in accrued expenses payable (5) Investing activities: Cash paid for plant assets (6) Financing activities: Short-term borrowing Issuance of capital stock Subtotals Net decrease in cash (x ) Totals SATELLITE 2010 Statement of Cash Flows For the Year Ended December 31, 2007 Cash flows from operating activities: Net income Add: Depreciation expense Increase in accounts payable Subtotal Less: Increase in accounts receivable Decrease in accrued expenses payable Net cash flow provided by (used in) operating activities Cash flows from investing activities: Cash paid to acquire plant assets Net cash used for investing activities Cash flows from financing activities: Short-term borrowing from banks Issuance of capital stock Net cash provided by financing activities Net increase (decrease) in cash Cash and equivalents, December 31, 2006 Cash and equivalents, December 31, 2007 Supplementary Schedule: Noncash Investing and Financing Activities Purchases of plant assets Less: Portion financed by issuing long-term notes payable Cash paid to acquire plant assets c. Briefly explain how operating can be a net use of cash when the company is operating so profitably