Drill 21 ·
AP Business with Personal Finance Cash Flow Statement Drill 21 is a practice drill. It contains 5 original questions created by Brian Stewart, a Barron's test prep author with over 20 years of tutoring experience.
A drill on reading a cash flow statement and explaining why net profit differs from net cash; uses an invented business and original figures.
Harbor Press is a small print shop. Although the shop reported a profit this year, the owner noticed the bank balance grew by much less than the profit. The cash flow statement below explains the difference. Parentheses show cash outflows. The net change reconciles beginning cash to ending cash. The figures are hypothetical.
Cash Flow Statement for Harbor Press (for the year)
| Item | Amount |
|---|---|
| Operating activities | |
| Net income | $22,000 |
| Add: depreciation | $3,000 |
| Increase in accounts receivable | ($9,000) |
| Increase in accounts payable | $2,000 |
| Net cash from operating activities | $18,000 |
| Investing activities | |
| Purchase of printing equipment | ($15,000) |
| Net cash from investing activities | ($15,000) |
| Financing activities | |
| Loan proceeds | $10,000 |
| Owner draw | ($4,000) |
| Net cash from financing activities | $6,000 |
| Net change in cash | $9,000 |
| Beginning cash | $12,000 |
| Ending cash | $21,000 |