答案和和详解如下： 1.Which of the following statements about operating income and operating cash flow is most accurate? A) Operating income is more reliable than operating cash flow because of the judgments and estimates involved with accrual accounting. B) Operating income is confirmed by operating cash flow when the growth rates of the two measures are relatively stable over time. C) Operating income exceeding operating cash flow is sustainable over the long-term. D) Operating cash flow usually increases faster than operating income when the firm is growing. The correct answer was B) When the growth rates of operating income and operating cash flow are stable over time, operating income is being confirmed by operating cash flow. Operating cash flow is more reliable than operating income. Over the long-term, operating income exceeding operating cash flow is not sustainable. During growth, operating cash flow is usually lower than operating income as the firm uses cash to increase inventories and receivables. 2.Which of the following statements about operating income and operating cash flow are correct or incorrect? Statement #1: | If operating income is growing faster than operating cash flow over the long-term, the firm may be recognizing revenue too soon or delaying the recognition of expense. | Statement #2: | Operating cash flow exceeding operating income is sustainable over the long-term. |
| Statement #1
| Statement #2 |
A) Correct Correct B) Incorrect Incorrect C) Correct Incorrect D) Incorrect Correct The correct answer was C) Statement #1 is correct. If operating income and operating cash flow are growing at different rates over the long-term, the firm may be engaging in earnings manipulation. Statement #2 is incorrect. Over the long-term, operating cash flow will eventually decline without the support of operating income. 3.Recently, Galaxy Corporation lowered its allowance for doubtful accounts by reducing bad debt expense from 2 percent of sales to 1 percent of sales. Ignoring taxes, what are the immediate effects on Galaxy’s operating income and operating cash flow?
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Operating income
| Operating cash flow
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A) Higher Lower B) No effect No effect C) No effect Lower D) Higher No effect The correct answer was D) Lower bad debt expense will result in higher operating income. Operating cash flow is not affected until Galaxy actually collects the receivables.
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发表于 2008-5-21 11:36
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