ions 1. 2. 3. 4. t of the balance sheet and the income statement S, operating income, and net income differ? How do gross profits, From the firm's perspective, income, divide and w e, how are dividends different from interest payments? What is a firm's net firm? working capital, and what does it tell you about the liquidity of a When a firm's accounts receivable ba firm has ex 5. lance increases from one period to the next, the ri enced a use of cash. How is it that an increase in an asset such as accounts receivable represents a use of cash? ern Inc. had an accounts payable balance of $5 million at the end of e balance rose to $7 million in 2013. What is the cash flow consequence 6. Appleby South 2012 and the ros of this change in accounts payable? 7. In 2013 RubKing Barbeque Sauce, Inc. purchased a new bottling machine at a cost of $1.5 million. The new machine is expected to last for 10 years and the firm plans to depreciate it using straight-line depreciation of $150,000 per year. What is the cash flow consequence of the purchase for 2013? The cash flow statement is one of the four basic financial statements. Define the objective in preparing this statement and discuss some of the types of questions that can be addressed using its content. 8. (Related to The Business of Life: Your Personal Balance Sheet and Income Statement) In The Business of Life: Your Personal Balance Sheet and Income Statement box feature we learned that individuals have financial statements just like firms. Prepare your personal balance sheet using the following items: (i) you have a 2003 Corolla that you bought for $3,500 and still owe a note of $2,000; (ii) your checking account has a balance of $453.28 and you have a savings account with a $2,412.49 balance (ii) you have an unpaid balance on your school loan of $12,591.22 (your tuition for last year). What is your current net worth? 9. (Related to Finance in a Flat World: GAAP VS. IFRS) In the Fi GAAP vs. IFRS box feature, we used in the United States, is not the same as that used throughout the rest of world. However, the U.S. system is converging with the internationa web search and write up a vergence of the U.S. and international accounting systems. 10. learned that GAAP, the financial reporting system the brief statement summarizing the current status of the con- system. Do a