# Financial Reporting And Analysis - Financial Reporting And Analysis Section 2

>>>>>>>>Financial Reporting And Analysis Section 2

• A

A decrease  • B

No effect  • C

An increase  • Option : A
• Explanation : PIA received the cash in 2012 when it recorded the unearned revenue and it was a part of the cash from operations in that year. In 2013, the revenue is earned so it will increase the taxes which will decrease the cash from operations.

• Option : B
• Explanation : To compute operating cash flow from net income, we start with net income, add non-cash charges such as depreciation, add the increase in current operating liabilities and subtract the increase in current operating assets.

 Net income \$45,000 Depreciation \$18,000 Amortization \$10,000

• A

\$9,300.  • B

\$64,300  • C

\$74,300  • Option : C
• Explanation : Operating cash flow = Net income + Depreciation and amortization - Increase in working capital Operating cash flow = 45,000 + 18,000 + 10,000 + ( -1500 + 1800 + 1000) = \$74,300

 Cash balance as of June 30, 2012 \$58,000 Cash balance as of July 1, 2011 \$65,000 Cash flows: Operating activities (\$45,000) Financing activities \$90,000

• A

(\$52,000).  • B

\$13,000.  • C

\$52,000.  • Option : A
• Explanation : Ending balance = Beginning balance + Cash flows 58,000 = 65,000 - 45,000 + 90,000 + Investing cash flow Investing cash flow = (\$52,000)

• A

\$6 million.  • B

\$10 million.  • C

\$14 million  • Option : A
• Explanation : Cash collected = Revenue - Increase in Accounts receivable Cash collected = \$10 million - \$4 million = \$6 million.