Required:

1. What accounting events trigger changes in the retained earnings account? 2. Explain the differences between cash flows from operating, financing, and investing activities. It is based on the statement of cash flows presented. 3. If a company increases its accounts payable compared to the previous year, what will be the effect on the cash account? 4. How do increases in fixed assets from one period to the next affect the cash account? 5. List at least three working capital accounts that represent sources of cash for the firm and the changes the financial manager would have to make to those accounts to improve the cash account for the next firm's closing period. 6. What does decrease in short-term notes mean in Davis Corporation, LLC's financial statement and how does it affect the cash balance at the end of the period? 7. From Davis Corporation, LLC's statement of cash flows, discuss what may have caused the greatest change in the company's cash flow position for 20x9 compared to the prior year.

$35 Davis Corporation, LLC Statement of Cash Flows (S million) Year Ending December 31, 20x9 Operating Activities Net income $42 Plus depreciation 30 Less increase in accounts receivables (5) Less increase in inventories (33) Plus increase in accounts payable 1 Cash flows from operations Investment Activities Less increase in gross fixed assets Financing Activities Decrease in short-term notes (2) Increase in long-term debt 11 Issued new common stock in par value and additional 4 paid in capital Less dividends paid to owners (10) Financing cash flows Decrease in cash Beginning cash Ending cash ($39) $3 ($1) 21 $20