ACTG 2010 Study Guide - Final Guide: Accrual, Return Period, Matching Principle

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20 Feb 2017

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Cash from/used in operations the cash an entity generates from or uses in its regular business activities. Cash from/used in investing activities cash spent buying and received from selling. Can from/used in financing activities cash an entity raises from and pays to equity investors and lenders. Cash from operations (cfo): use of or collection of cash in day-to-day business activities (e. g. cash and cash equivalents, payments received from customers, payments to suppliers) Cash from financing activities: cash raised from and paid to investors and creditors (e. g. mortgages, bank loans, bonds, long-term debt, dividend payment, repurchase of shares) Cash from investing activities: cash spent on buying capital assets and raised from selling assets (also includes investment in equity and debt of other companies) Recorded at the end of the accounting period. Under the accrual basis of accounting, adjusting entries are needed because of: To ensure that revenue recognition and matching principles are followed.

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Please analyze this company 10Q report and till me areas inwhich they are doing well and areas which need improvements.

	2018				2017
Cash Flows from Operating Activities
Net loss		$	(784,627	)		$	(397,181	)
Adjustments to reconcile net loss to net cash used in operatingactivities:
Depreciation and amortization			416,233				376,602
Stock-based compensation			141,639				103,717
Amortization of debt discounts andissuance costs			39,345				31,747
Inventory write-downs			18,546				26,918
Loss on disposals of fixedassets			52,237				41,120
Foreign currency transactionlosses			47,661				5,064
Loss related to SolarCityacquisition			-				11,571
Non-cash interest and otheroperating activities			(3,984	)			(6,589	)
Changes in operating assets andliabilities, net of effect of business combinations:
Accounts receivable			(169,142	)			91,541
Inventories			(322,081	)			(124,514	)
Operating lease vehicles			(97,196	)			(458,965	)
Prepaid expenses and other currentassets			(50,001	)			(75,504	)
MyPower customer notes receivableand other assets			(57,583	)			8,006
Accounts payable and accruedliabilities			317,983				2,531
Deferred revenue			45,795				103,941
Customer deposits			67,359				(51,004	)
Resale value guarantee			-				184,579
Other long-term liabilities			(60,560	)			56,609
Net cash used in operatingactivities			(398,376	)			(69,811	)
Cash Flows from Investing Activities
Purchases of property and equipment excluding capital leases,net of sales			(655,662	)			(552,624	)
Purchases of solar energy systems, leased and to be leased			(72,975	)			(219,948	)
Business combinations, net of cash acquired			-				(109,147	)
Net cash used in investingactivities			(728,637	)			(881,719	)
Cash Flows from Financing Activities
Proceeds from issuances of common stock in public offerings			-				400,175
Proceeds from issuances of convertible and other debt			1,775,481				1,838,166
Repayments of convertible and other debt			(1,389,388	)			(690,945	)
Repayments of borrowings under Solar Bonds issued to relatedparties			(17,500	)			(90,000	)
Collateralized lease (repayments) borrowings			(87,092	)			186,355
Proceeds from exercises of stock options and other stockissuances			94,018				57,307
Principal payments on capital leases			(18,787	)			(18,303	)
Common stock and debt issuance costs			(2,913	)			(11,094	)
Purchases of convertible note hedges			-				(204,102	)
Proceeds from issuances of warrants			-				52,883
Proceeds from investments by noncontrolling interests insubsidiaries			73,704				142,003
Distributions paid to noncontrolling interests insubsidiaries			(52,942	)			(63,696	)
Payments for buy-outs of noncontrolling interests insubsidiaries			(2,921	)			-
Net cash provided by financingactivities			371,660				1,598,749
Effect of exchange rate changes on cash and cash equivalents andrestricted cash			10,102				11,643
Net (decrease) increase in cash and cash equivalents andrestricted cash			(745,251	)			658,862
Cash and cash equivalents and restricted cash, beginning ofperiod			3,964,959				3,766,900
Cash and cash equivalents and restricted cash, end of period		$	3,219,708			$	4,425,762
Supplemental Non-Cash Investing and Financing Activities
Acquisitions of property and equipment included inliabilities		$	286,975			$	654,322
Estimated fair value of facilities under build-to-suitleases		$	56,169			$	65,244

The following events occurred last year at DorderCorporation:

Purchase of plant and equipment	$20,000
Sale of long-term investment	$8,000
Dividends received on long-term investments	$5,000
Paid off bonds payable	$11,000
Depreciation expense	$6,500

Based on the above information, the cash provided (used) byinvesting activities for the year on the statement of cash flowswould net to:

$(11,000)

$(12,000)

$(24,500)

$(6,500)

Last year Burch Corporation's cash account decreased by $16,000.Net cash provided by investing activities was $7,100. Net cash usedin financing activities was $14,000. On the statement of cashflows, the net cash flow provided by (used in) operating activitieswas:

$6,900

$(16,000)

$(9,100)

$(22,900)

McCorey Corporation recorded the following events last year:

Repurchase by the company of its own commonstock	$39,000
Sale of long-term investment	$58,000
Interest paid to lenders	$14,500
Dividends paid to the company's shareholders	$68,000
Collection by McCorey of a loan made to anothercompany	$44,000
Payment of taxes to governmental bodies	$24,500

On the statement of cash flows, some of these events areclassified as operating activities, some are classified asinvesting activities, and some are classified as financingactivities.

Based solely on the information above, the net cash provided by(used in) investing activities on the statement of cash flows wouldbe:

$102,000

$(9,500)

$34,000

$(19,500)

Financial statements of Rukavina Corporation follow:

Rukavina Corporation Comparative Balance Sheet
	Ending Balance	Beginning Balance
Assets:
Cash and cash equivalents	$24	$21
Accounts receivable	77	72
Inventory	33	31
Property, plant and equipment	528	480
Less: accumulated depreciation	326	299
Total assets	$336	$305
Liabilities and stockholders'equity:
Accounts payable	$42	$52
Bonds payable	95	110
Common stock	71	72
Retained earnings	128	71
Total liabilities and stockholders' equity	$336	$305

Income Statement
Sales	$705
Cost of goods sold	448
Gross margin	257
Selling and administrative expenses	151
Net operating income	106
Income taxes	38
Net income	$68

Cash dividends were $11. The company did not dispose of anyproperty, plant, and equipment. It did not issue any bonds payableor repurchase any of its own common stock. The following questionspertain to the company's statement of cash flows.

The net cash provided by (used in) investing activities for theyear was:

$(11)

$(15)

$(48)

periwinkleserval695

A fire destroyed your firmâs ending balance sheet and income statement after the year-end
but before the financial statements are released. However, you have been successful in obtaining the
numbers for the beginning balance sheet and the statement of cash flows, which are provided to you and
your team members in Excel format. Fields representing the missing balance sheet and income statement
are End of year2 in the Excel sheet

CONSOLIDATED BALANCE SHEETS (USD $)	End of year 2	End of year 1
In Thousands, unless otherwise specified	End of year 2	End of year 1
Current assets:
Cash and cash equivalents	ã	598
Receivables, net	ã	230
Inventories, net	ã	2309
Other current assets	ã	47
Total current assets	ã	3184
Property and equipment, net of accumulated depreciation	ã	1292
Assets held for sale	ã	1
Goodwill	ã	76
Intangible assets, net	ã	29
Other assets, net	ã	32
Assets, Total	ã	4614
Current liabilities:	ã	0
Current portion of long-term debt	ã	0
Accounts payable	ã	2030
Accrued expenses	ã	380
Other current liabilities	ã	150
Total current liabilities	ã	2560
Long-term debt	ã	604
Other long-term liabilities	ã	239
Commitments and Contingencies	ã	0
Stockholders Equity Attributable to Parent [Abstract]	ã	0
Preferred stock, nonvoting, $00001 par value	ã	0
Common stock, voting, $00001 par value	ã	0
Additional paid-in capital	ã	520
Treasury stock, at cost	ã	-27
Accumulated other comprehensive income (loss)	ã	3
Retained earnings	ã	715
Total stockholders equity	ã	1210
Liabilities and Stockholders Equity, Total	ã	4613


CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	12 Months Ended
In Thousands, except Per Share data, unless otherwise specified	Year 2
Net sales	ã
Cost of sales, including purchasing and warehousing costs	ã
Gross profit	ã
Selling, general and administrative expenses	ã
Operating income	ã
Interest expense	ã
Other income, net	ã
Total other, net	ã
Income before provision for income taxes	ã
Provision for income taxes	ã
Net income	ã


CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	12 Months Ended
In Thousands, unless otherwise specified	Year 2
Cash flows from operating activities:
Net income	$392
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	208
Share-based compensation	13
Loss on property and equipment, net	1
Other	2
Provision for deferred income taxes	-2
Excess tax benefit from share-based compensation	-16
Increase Decrease in Operating Capital
Receivables, net	-32
Inventories, net	-204
Other assets	11
Accounts payable	113
Accrued expenses	63
Other liabilities	-4
Net cash provided by operating activities	545
Cash flows from investing activities:
Purchases of property and equipment	-196
Payments to Acquire Businesses, Gross	-186
Sale of certain assets of acquired business	19
Proceeds from sales of property and equipment	1
Net cash used in investing activities	-362
Cash flows from financing activities:
(Decrease) increase in bank overdrafts	-3
Decrease in financed vendor accounts payable	0
Issuance of senior unsecured notes	449
Payment of debt related costs	-9
Borrowings under credit facilities	0
Payments on credit facilities	0
Dividends paid	-18
Proceeds from the issuance of common stock, primarily exercise of stock options	4
Tax withholdings related to the exercise of stock appreciation rights	-22
Excess tax benefit from share-based compensation	16
Repurchase of common stock	-81
Contingent payment accrued on acquisitions	5
Other	-1
Net cash provided by (used in) financing activities	331
Net increase (decrease) in cash and cash equivalents	514
Cash and cash equivalents, beginning of period	598
Cash and cash equivalents, end of period	1,112
Supplemental cash flow information:
Interest paid	35
Income tax payments	219
Non-cash transactions:
Accrued purchases of property and equipment	21
Retirement of common stock	0
Contingent consideration accrued on acquisitions	0
Changes in other comprehensive income	1
Declared but unpaid cash dividends	$4

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ACTG 2010 Study Guide - Final Guide: Accrual, Return Period, Matching Principle

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