标题: Schweser Q on wages payable [打印本页] 作者: ramdabom 时间: 2013-4-10 23:14 标题: Schweser Q on wages payable
When preparing a statement of cash flows under the indirect method, the adjustment to net income for an icnrease in WP and a decrease in the deferred tax liability on the balance sheet compared to prior reporting period is
WP Decrease in DTL
A no adjustment
B +
C + no adjustment
D +
An explanation would be helpful, I thought that when wages payable goes up, you are paying your employees more, so the NI would go down?作者: YouCanDoIt 时间: 2013-4-10 23:14
I think it’s D… the WP increase would decrease cash flow because you’ve not actually paid your employees yet (though you’ve promised to) hence, it effects your net income but not your cash flow.
The decrease in deferred tax liability i’m not as sure about but to me it sounds like you finally paid out (of your cash) the taxes you had deferred effecting your cash flow but not effecting your net income.作者: Kapie 时间: 2013-4-10 23:15
It was A actually作者: luda002 时间: 2013-4-10 23:15
Since a reduction in DTL is tax expense, the decrease (use of cash) would have already been included in Net Income (on the income statement as a tax expense)…, you won’t need to make any additional adjustment to NI for DTL reduction.作者: Kapie 时间: 2013-4-10 23:16
should be B作者: willsucceed 时间: 2013-4-10 23:16
I opt for B
cash flows under the indirect method,
liability is postively related i.e., increase in payable will increase cash flow
Asset is negatively related i.e., increase in receivable will decrease cash flow
