3 statement flow through questions

Accounts Receivable decreases by $10. Walk me through the 3 financial statements?

Accounts Receivable: when a company sells on credit to customers. Revenue has been recorded on the income statement, but cash has not received yet Income Statement: No changes on the Income Statement Cash Flow Statement: Accounts Receivable goes down by $10 under Cash flow from operations which is an increase of $10 in cash. Balance Sheet: Cash is up by $10 and Accounts receivable balance is down by $10 which makes everything balance.

Accounts Receivable increases by $10 walk me through the 3 statements?

Accounts Receivable: when a company sells on credit to customers. Revenue has been recorded on the income statement, but cash has not received yet Income Statement: Revenue goes up by $10 which increases Net income by $10(1-Tax Rate) Assuming a 40% tax rate NI increases by $6. Cash Flow Statement: $6 increase in Net income flows onto here and accounts receivable increases by $10 under Cash flow from operations which is a cash outflow of $10. Your net change in cash is a $4 decrease in cash. Balance Sheet: Cash is down by $4 and Accounts receivable increases by $10 which is a net increase of $6 on the assets side. The $6 increase from Net Income on the income statement flows into retained earnings on the balance sheet to make everything balance

Accounts Payable decreases by $10, walk me through the 3 financial statements

Accounts payable: when the company incurs an expense and has received an invoice from the vendor or supplier but hasn't paid yet (usually one-time expenses in nature). The expense has already been recorded on the income statement Income Statement: No changes to the income statement Cash Flow Statement: Accounts Payable decreases by $10 which is a cash outflow and your change in cash is a decrease of $10 Balance Sheet: Cash is down by $10 on the assets side and accounts payable is down by $10 on the liabilities side to make everything balance

Accounts Payable increases by $10, walk me through the 3 financial statements?

Accounts payable: when the company incurs an expense and has received an invoice from the vendor or supplier but hasn't paid yet (usually one-time expenses in nature). The expense has already been recorded on the income statement Income Statement: Operating expenses increases by $10 and net Income decreases by $10(1-Tax Rate) Assuming a 40% tax rate Net Income decreases by $6 Cash Flow Statement: Net Income decreases by $6 and Accounts Payable increases by $10 which is a cash inflow of $10 and net change in cash is an increase of $4 Balance Sheet: Cash is up by $4 on the assets side and accounts payable is up by $10 on the liabilities side and Net Income from the income statement flows into retained earnings of a decrease of $6 to make everything balance

Accrued Expenses decrease by $10. Walk me through the 3 financial statements?

Accrued Expenses: Also money owed to vendors, suppliers, employees but the invoice has not yet been received, Expense is usually recurring in nature, and has already been recorded on the income statement. The balance owed is estimated or "accrued" until the invoice is received and it becomes accounts payable Income Statement: No changes to the income statement Cash Flow Statement: Accrued Expenses decrease by $10 which is a cash outflow under Cash flow from operations and your change in cash is a decrease of $10 Balance Sheet: Cash is down by $10 on the assets side and on the liabilities side Accrued expenses are down $10 to make everything balance

Accrued expenses increase by $10. Walk me through the 3 financial statements?

Accrued Expenses: Also money owed to vendors, suppliers, employees but the invoice has not yet been received, Expense is usually recurring in nature, and has already been recorded on the income statement. The balance owed is estimated or "accrued" until the invoice is received and it becomes accounts payable Income Statement: Operating expenses increase by $10 which decreases net income by $10 (1-Tax Rate) which results in a decrease of $6 Cash Flow Statement: Net Income decreases by $6 and Accrued expenses increase by $10 which is an increase of cash of $10 and net change in cash is up $4. Balance Sheet: Cash is up by $4 on the assets side and Accrued expenses are up by $10 on the liabilities side and Net Income from the Income Statement flows into retained earnings and decreases by $6 to make everything balance

Capex Increases by $10. Walk me through the 3 financial statements?

Capex: Money spent by a business on acquiring or maintaining fixed assets, such as PP&E Income Statement: No changes to the Income Statement Cash Flow Statement: Capex increases by $10 which is a cash outflow of $10 and your change in cash is a decrease of $10 Balance Sheet: Cash is down by $10 and PP&E is up by $10 on the assets side to balance everything out

Deferred Revenue increases by $10, Walk me through the 3 financial statements?

Deferred Revenue: Cash collected from customers, product/service yet to be delivered Income Statement: No changes to the Income Statement Cash Flow Statement: Deferred Revenue is up by $10 which is a cash inflow of $10 and your change in cash is an increase of $10 Balance Sheet: Cash is up by $10 on the assets side and deferred Revenue is up by $10 on the liabilities side to make everything balance

Deferred Revenue decreases by $10. Walk me through the 3 financial statements?

Deferred Revenue: Cash collected from customers, product/service yet to be delivered Income Statement: Revenue is up by $10 and your Net Income increases by $10(1-Tax Rate) Assuming a 40% tax rate Net Income increases by $6 Cash flow Statement: Net Income increases by $6 and deferred Revenue is down $10 which is a cash outflow under cash flow from operations and your net change in cash is a decrease of $4 Balance Sheet: Cash is down by $4 on the assets side and deferred Revenue is down by $10 on the liabilities side and Net Income flows into retained earnings from the Income statement of an increase of $6 to make everything balance.

Inventory increases by $10. Walk me through the 3 financial statements

Inventory: Product sitting in the warehouse, waiting to be sold. A part of COGS, but before it's been sold Income Statement: No changes on the income statement Cash Flow Statement: Under Cash Flow from operations Inventory increases by $10 which is a cash outflow of $10 and your net change in cash Balance Sheet: Cash is down by $10 and inventory is up by $10 which balances everything

Inventory Decreases by $10. Walk me through the 3 financial statements?

Inventory: Product sitting in the warehouse, waiting to be sold. A part of COGS, but before it's been sold Income Statement: COGS increases by $10 so gross profit decreases by $10. Net Income decreases by $10(1-Tax Rate) Assuming a 40% tax rate Net Income decreases by $6 Cash Flow Statement: Net Income decreases by $6 and Inventory decreases by $10 which is a cash inflow of $10 and net change in cash is a $4 increase Balance Sheet: Cash is up by $4 and inventory is down by $10 which is a net change of a decrease of $6 on Assets side. Net Income from the income statement flows into retained earnings of a decrease of $6 to make everything balance.

Prepaid Expenses increases by $10. Walk me through the 3 financial statements

Prepaid Expenses: When a company pays for services in advance of using them (insurance, property rental). The cash has been paid, but the expenses haven't been recorded on the income statement Income Statement: No changes on the Income Statement Cash Flow Statement: Prepaid Expenses increases by $10 under Cash flow from operations which is a cash outflow of $10 so your net change in cash is a decrease of $10. Balance Sheet: Cash is down by $10 buy prepaid Expenses are up by $10 and everything balances

Prepaid Expenses decrease by $10. Walk me through the 3 financial statements

Prepaid Expenses: When a company pays for services in advance of using them (insurance, property rental). The cash has been paid, but the expenses haven't been recorded on the income statement Income Statement: Operating expenses increase by $10 which means that Net income decreases by $10 (1-Tax Rate) assuming a 40% tax rate your net income decreases by $6 Cash Flow Statement: Net Income Decreases by $6 and prepaid expenses go down by $10 which is a cash inflow so your net change in cash is an increase of $4 Balance Sheet: Cash is up by $4 and prepaid expenses are down by $10 which is a net decrease of $6 on the assets side. Net Income flows into retained earnings of a $6 decrease which balances everything.

PP&E sale proceeds increase by $10. Walk me through the 3 financial statements

When Long term Assets are sold Income Statement: No changes to the income statement Cash Flow Statement: PP$E sale proceeds are up by $10 which is a cash inflow of $10 and your change in cash is an increase of $10 Balance Sheet: Cash is up by $10 and PP&E is down by $10 on the assets side to make everything balance