Question 2 (20%) Consider a firm that needs to record the following transactions in the fiscal year 2020. 1 FY2019 FY2020 -2500 -2500 +4900 +4900 P PCR S PCU -1000 -1000 +3050 +3050 2 P PCR S PCU 3 -X -X +2200 +2200 P PCR S PCU -1500 -1500 +2800 +2800 4 P PCR S PCU 5 6 7 -900 -900 +1600 +1600 FY2021 P PCR S PCU -2000 -2000 +3300 +3300 P PCR S PCU -2000 -2000 +3700 +3700 P PCR S PCU P = Purchase, PCR = Payment to creditor, S= Sales, PCU= Payment from customers For now, assume that X = 1200. a. What were the (accrual-based) earnings for 2020? b. What was the cash flow generated in 2020? c. Calculate a traditional (indirect) cash flow statement for 2020 based on the seven transactions. d. Assume now that X = 700. Does your answer above change for a), b), and c). If not, why? If yes, show how it changes e. What are the most used critiques against using cash-flow-based performance measures? What about accrual-based performance measures? See next page for Q3

Chemistry
10th Edition
ISBN:9781305957404
Author:Steven S. Zumdahl, Susan A. Zumdahl, Donald J. DeCoste
Publisher:Steven S. Zumdahl, Susan A. Zumdahl, Donald J. DeCoste
Chapter1: Chemical Foundations
Section: Chapter Questions
Problem 1RQ: Define and explain the differences between the following terms. a. law and theory b. theory and...
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Question 2 (20%)
Consider a firm that needs to record the following transactions in the fiscal year 2020.
1
FY2019
FY2020
-2500
-2500 +4900
+4900
P
PCR
S
PCU
-1000 -1000 +3050 +3050
2
P
PCR
S
PCU
3
-X
-X
+2200 +2200
P
PCR
S
PCU
-1500 -1500 +2800 +2800
4
P
PCR
S
PCU
5
6
7
-900 -900 +1600 +1600
FY2021
P
PCR
S
PCU
-2000 -2000 +3300
+3300
P
PCR
S
PCU
-2000 -2000 +3700 +3700
P
PCR
S
PCU
P = Purchase, PCR = Payment to creditor, S= Sales, PCU= Payment from customers
For now, assume that X = 1200.
a. What were the (accrual-based) earnings for 2020?
b. What was the cash flow generated in 2020?
c. Calculate a traditional (indirect) cash flow statement for 2020 based on the seven transactions.
d. Assume now that X = 700. Does your answer above change for a), b), and c). If not, why? If yes,
show how it changes
e. What are the most used critiques against using cash-flow-based performance measures?
What about accrual-based performance measures?
See next page for Q3
Transcribed Image Text:Question 2 (20%) Consider a firm that needs to record the following transactions in the fiscal year 2020. 1 FY2019 FY2020 -2500 -2500 +4900 +4900 P PCR S PCU -1000 -1000 +3050 +3050 2 P PCR S PCU 3 -X -X +2200 +2200 P PCR S PCU -1500 -1500 +2800 +2800 4 P PCR S PCU 5 6 7 -900 -900 +1600 +1600 FY2021 P PCR S PCU -2000 -2000 +3300 +3300 P PCR S PCU -2000 -2000 +3700 +3700 P PCR S PCU P = Purchase, PCR = Payment to creditor, S= Sales, PCU= Payment from customers For now, assume that X = 1200. a. What were the (accrual-based) earnings for 2020? b. What was the cash flow generated in 2020? c. Calculate a traditional (indirect) cash flow statement for 2020 based on the seven transactions. d. Assume now that X = 700. Does your answer above change for a), b), and c). If not, why? If yes, show how it changes e. What are the most used critiques against using cash-flow-based performance measures? What about accrual-based performance measures? See next page for Q3
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