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1) A transaction where a company receives money from customers for products to be delivered in...

1) A transaction where a company receives money from customers for products to be

delivered in the future should be recorded as

a. Revenue and an asset

b. An asset and a liability

c. Revenue and a liability

2) You have the following information for Star, Inc. for its 2017 FY

Net Income. $20 million

Depreciation. $2 million

Accounts receivable.   $3 million decrease from the previous FY

Inventory. $4 million increase from the previous FY

Accounts payable. $5 million increase from the previous FY

What is Star’s operating cash flow for FY 2017?

a. $22 million

b. $26 million

c. $14 million

business   accounting   
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Answer #1

1) Revenue received from customer for future delivery is recorded as an asset and liabilities

So answer is b) an asset and a liability

2) Operating cash flow

Net income 20
Depreciation 2
Account receivable decrease 3
Inventory increase -4
Account payable increase 5
Net cash flow from operating activities 26

So answer is b) $26 million

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