Depreciation is not a legitimate cash flow
Indicate whether the statement is true or false
TRUE
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What are the objectives of application controls?
Carver Lumber sells lumber and general building supplies to building contractors in a medium-sized town in Montana. Data regarding the store's operations follow:•Sales are budgeted at $350,000 for November, $320,000 for December, and $300,000 for January. •Collections are expected to be 90% in the month of sale and 10% in the month following the sale. •The cost of goods sold is 75% of sales. •The company desires to have an ending merchandise inventory equal to 60% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase. •Other monthly expenses to be paid in cash are $24,700. •Monthly depreciation is $16,000. •Ignore taxes. Balance SheetOctober 31AssetsCash$19,000Accounts
receivable 77,000Inventory 157,500Property, plant and equipment, net of $502,000 accumulated depreciation 1,002,000Total assets$1,255,500Liabilities and Stockholders' EquityAccounts payable$272,000Common stock 780,000Retained earnings 203,500Total liabilities and stockholders' equity$1,255,500The cash balance at the end of December would be: A. $19,000 B. $137,600 C. $163,600 D. $61,300
The current ratio shows how easily a company can pay its current obligations.
Answer the following statement true (T) or false (F)
How do temporary accounts differ from permanent accounts?
A. Only permanent accounts are transferred to Retained Earnings during the closing process. B. Only permanent accounts are found on the financial statements. C. Only temporary accounts are used in the adjustments at the end of the accounting period. D. Only temporary accounts are closed at the end of the accounting period.