Reference no: EM132439006

Questions -

Q1. What effect does the journal entry to book depreciation have on the amount of cash generated by operating activities?

Q2. The Knight Company reported depreciation expense of $5,000 and net income of $8,000 on its 2006 income statement. During 2006 the company's accounts receivable balance decreased by $2,000. Based on this information alone, what was the amount of cash flow from operating activities?

Use the following to answer questions 3-4:

Emett Brown Associates reports the following comparative balance sheets and income statement information.

COMPARATIVE BALANCE SHEETS
	12/31/05		12/31/06
Cash	$6,000		$11,000
Accounts Receivable	2,000		4,000
Prepaid Insurance	5,000		4,000
Inventory	3,000		1,000
Plant, Property & Equip.	6,000		5,000
Totals	$22,000		$25,000
Accounts Payable	4,000		6,000
Oper. Expenses Pay	5,000		2,000
L. T. Notes Payable	4,000		3,000
Stockholders' Equity	9,000		14,000
Totals	$22,000		$25,000
INCOME STATEMENT		2006
Revenue		$35,000
Cost of Goods Sold		(20,000)
Gross Margin		15,000
Operating Expenses		(10,000)
Net Income		$5,000

Q3. The amount of cash revenue received from customers during 2006 was $__________.

Q4. The amount of cash paid for inventory purchases during 2006 was $___________.

Q5. What types of items would appear on the statement of cash flow as financing activities?