标题: FRA Reading 22 EOC question 2 [打印本页] 作者: tango_gs 时间: 2013-4-12 23:02 标题: FRA Reading 22 EOC question 2
On page 110 of the FRA book:
Question 2 asks which of the following effects a change in depreciation method from straight line to accelerated depreciation is correct:
a)Net profit margin decreases
b)total asset turnover increases
c)cash flow from op activities increases
The correct answer is c which I agree with however I don’t understand why the other two options are incorrect. For A, wouldn’t a change to accelerated dep increase dep expense thus decreasing net income and as a result net profit margin? And for B, since you are depreciating your assets at a faster rate, wouldnt your asset base get smaller thus increasing total asset turnover?
Any clarification on this would be great. Thanks.作者: studyn 时间: 2013-4-12 23:02
Sorry. Just realized there was an errata released for this question.
