Computation of Operating Cash Flows
the Financial Statements of Custom

question 115

Essay

Computation of operating cash flows
The financial statements of Custom Corporation provide the following information for the current year:
$\begin{array}{lrr}&\begin{array}{c}\text { End of } \\\text { Year }\end{array} & \begin{array}{c}\text { Beginning } \\\text { of Year }\end{array} \\\text { Accounts receivable } & \$ 201,000 & \$ 221,000 \\\text { Inventory } & \$ 249,000 & \$ 233,000 \\\text { Short-term prepayments } & \$ 12,000 & \$ 9,500 \\\text { Accounts payable (for merchandise) } & \$ 177,000 & \$ 170,000 \\\text { Accrued operating expenses payable } & \$ 25,500 & \$ 33,200 \\\text { Accrued income taxes payable } & \$ 12,600 & \$ 15,500 \\\text { Net sales } & \$ 801,000 & \\\text { Cost of goods sold } & \$ 465,000 & \\\text { Operating expenses (including depreciation of } \$ 40,000) & \$ 300,000 & \\\text { Income taxes expense } & \$ 39,000 &\end{array}$
Using this information, compute for the current year:

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Definitions:

Accrual Basis Accounting

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid.

Cash Flow

The total amount of money being transferred into and out of a business, affecting the organization's liquidity.

Fund-Raising Results

The outcomes or achievements of efforts to collect financial resources or donations, often critical for the operation and projects of nonprofit organizations.

Program Results

The outcomes or impacts of a project or program, often used as a measure of its effectiveness.