what does it mean when I turn on my mac and screen only shows a flashing folder with a question mark

There are four general causes of this issue:

1. The computer's PRAM no longer contains a valid startup disk setting when there aren't any problems with the disk itself. This can be checked for by pressing the Option key and seeing if the drive appears.

2. The internal drive's directory structure has become damaged. This requires usage of an alternate bootable system to perform the repair.

3. Critical system files have been deleted. This requires usage of an alternate bootable system to reinstall them.

4. The internal drive has died or become unplugged. This is the most likely case if the computer took a sharp impact or there are unusual sounds coming from the hard drive's location.

(67681)

Read this.

http://support.apple.com/kb/TS1440

It means the iMac can't find the Operating System files or the Hard Drive itself, try holding down ALT (option key) on startup and selecting Macintosh HD, does it boot fine now? Also do the same thing and select the recovery partition, then disk utility, then verify and repair both the disk and the disk permissions and then restart.