答案和详解如下： 31.Which of the following is TRUE about the consideration of depreciation in the operations section of a cash flow statement? Direct Method Indirect Method A) Considers Considers
B) Considers Does not consider C) Does not consider Considers
D) Does not consider Does not consider The correct answer was C) The indirect method must add back depreciation expense because the starting point is net income. Since the direct method does not begin with net income it does not need to consider non-cash expenses such as depreciation. 32.When using the indirect method for computing cash flow from operating activities, a change in accounts payable will require which of the following? A) A negative (positive) adjustment to net income when accounts payable increases (decreases). B) A positive (negative) adjustment to net income when accounts payable increases (decreases). C) A positive adjustment to net income regardless of whether accounts payable increases or decreases. D) A negative adjustment to net income regardless of whether accounts payable increases or decreases. The correct answer was B) A decrease in accounts payable represents an outflow. Hence, a negative adjustment will be required. Conversely, an increase represents an inflow and a positive adjustment. 33.Darth Corporation’s most recent income statement shows net sales of $6,000, and Darth’s marginal tax rate is 40 percent. The total expenses reported were $3,200, all of which were paid in cash. In addition, depreciation expense was reported at $800. A further examination of the most recent balance sheets reveals that accounts receivable during that period increased by $1,000. The cash flow from operating activities reported by Darth should be: A) $1,200. B) $2,000. C) $2,200. D) $1,000. The correct answer was D) Net income is ($6,000 – 3,200 – 800)(1 – 0.4) = $1,200. Adjustments to reconcile net income to cash flow from operating activities will require that depreciation ($800) be added back, and increase in accounts receivable ($1,000) be subtracted: $1,200 + 800 – 1,000 = $1,000. 34.When calculating cash flow from operations (CFO) using the indirect method which of the following is most accurate? A) The indirect method requires an additional schedule to reconcile net income to cash flow. B) In using the indirect method, each item on the income statement is converted to its cash equivalent. C) Accumulated depreciation would be a deduction to calculate the net cash flow, because this is a non-cash activity. D) When recognizing a gain on the sale of fixed assets, the amount is a deduction to operating cash flows. The correct answer was D) When recognizing a gain on the sale of fixed assets, the amount is a deduction to operating cash flows. This is because the gain would be double counted in the investing section and in net income. Therefore, the gain must be removed from net income. The direct method of cash flow calculation converts the income statement items to their cash equivalents, not the indirect method. When calculating cash flow from operations, the current period depreciation (expense) amount should be used and not total accumulated depreciation. Also, depreciation is added to net income in order to calculate CFO using the indirect method. 35.The following information is from the balance sheet of Silverstone Company: § Net Income for 5/1/05 to 5/31/05: $8,000 Balance 5/01/05 | Account | Balance 5/31/05 | $2,000 | Inventory | $1,750 | $1,200 | Prepaid exp. | $1,700 | $800 | Accum. Depr. | $975 | $425 | Accounts payable | $625 | $650 | Bonds payable | $550 |
Using the indirect method, calculate the cash flow from operations for Silverstone Company as of 5/31/05: A) Increase in cash of $8,025. B) Increase in cash of $8,125. C) Increase in cash of $7,725. D) The indirect method cannot be calculated from the information provided. The correct answer was B) Silverstone Company’s cash flow from operations would be calculated as +Net Income $8,000 + Inventory $250 - Prepaid exp. $500 + Depreciation $175 + A/P $200 = $8,125. Bonds payable is a financing activity and would not be included in the cash flow from operations. The indirect method takes the change in the non-cash accounts and decreases or increases net income to get to the change in cash flow. | 
发表于 2008-4-11 18:20
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