CF 0

CF 1

Stmt Format

Income Taxes

Indirect Method

Solution 0

Does NI=CF?

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Net Income vs Cash Flow...are they the same thing?

1. Johnson Company earned revenue of $15,000 for the current year, all of which was received in cash. Additionally, Johnson paid $10,000 of expenses, all in cash.

a. What was the net income for the period? ____________

b. How much cash was generated for the period? ____________

2. Johnson Company earned revenue of $15,000 for the current year. A total of $12,000 was collected in cash, and the rest was on account. Additionally, Johnson paid $8,000 of expenses, all in cash.

a. What was the net income for the period? ____________

b. How much cash was generated for the period? ____________

c. How would you derive the cash collected, starting from the net income figure?

3. Johnson Company earned revenue of $15,000 for the current year. A total of $12,000 was collected in cash, and the rest was on account. Additionally, Johnson had $8,000 of expenses, but only paid $6,000 of those expenses in cash (the rest was on account).

a. What was the net income for the period? ____________

b. How much cash was generated for the period? ____________

c. How would you derive the cash collected, starting from the net income figure?

4. Wellington Company earned revenue of $15,000 for the year, and collected the entire amount in cash. Wellington had $12,000 in expenses. Of the expenses, $9,000 were paid in cash, and $3,000 was Depreciation Expense.

a. What was the net income for the period? ____________

b. How much cash was generated for the period? ____________

c. How would you derive the cash collected, starting from the net income figure?

5. Fordham Company earned revenue of $30,000 and incurred expenses of $20,000. The beginning balance of Accounts Receivable was $12,000 and the ending balance was $10,000.

a. What was the net income for the period? ____________

b. How much cash was generated for the period? ____________

c. How would you derive the cash collected, starting from the net income figure?

6. Fordham Company earned revenue of $30,000 and incurred expenses of $20,000. The beginning balance of Accounts Receivable was $12,000 and the ending balance was $10,000. Accounts Payable went from $9,000 to $6,000 during the period. One of the expenses was for depreciation, in the amount of $1,000.

a. What was the net income for the period? ____________

b. How much cash was generated for the period? ____________

c. How would you derive the cash collected, starting from the net income figure?