Fizzzle Inc

1. Fizzzle Inc. sold a piece of equipment during the period for $230,000 and recorded a gain of $45,000 on the sale. How should this gain be treated when preparing the operating activities section of the statement of cash flows using the indirect method?

The gain is subtracted from net income in the operating activities section.

2. Free cash flows to all debt and common equity shareholders represents the excess of cash flows from

operating activities over cash flows for investing activities

3. If a firm is growing and expanding its accounts receivable and inventories faster than its current operating liabilities its cash flow from operation will normally be

less than net income

4. In a statement of cash flows, proceeds from issuing equity instruments should be classified as cash inflows from

financing activities

5. Kraco Corporation reported 2010 net income of $450,000, including the effects of depreciation expense of $60,000, and amortization expense on a patent of $10,000. Also, cash of $50,000 was borrowed on a 5-year note payable. Based on this data, total cash inflow from operating activities using the indirect method for 2010 was

$520,000

6. Krenshaw Company reported total sales revenue of $80,000, total expenses of $72,000, and net income of $8,000 for the year ended December 31, 2009. During 2009, accounts receivable increased by $3,000, merchandise inventory decreased by $2,000, accounts payable increased by $1,000, and $5,000 in depreciation expense was recorded. Assuming no other adjustments to net income are needed, the net cash inflow from operating activities using the indirect method was

$13,000

7. Lagos Corp. recorded sales of $345,000 in 2010, in addition its accounts receivable and accounts payable balances at the beginning and end of 2010 were as follows:
   
   Jan. 1, 2010
   Dec. 31, 2010
   Accounts Receivable
   $65,000
   $90,000
   Accounts Payable
   $32,000
   $28,000
   
   How much cash did Lagos collect from customers in 2010?

$320,000

8. Lui Company's 2010 income statement reported total sales revenue of $250,000. The 2009-2010 comparative balance sheets showed that accounts receivable decreased by $20,000. The 2010 "cash receipts from customers" would be

$270,000

9. Normally, cash flows from financing will start using cash during which phase of the product life cycle?

Maturity

10. Normally, cash flows from investing activities will start providing cash during which phase of the product life cycle?

Maturity