Give two explanations for why the amount of cash outflow for equipment for the year might not equal the increase in the Equipment account balance from one balance sheet date to the next
Possible explanations for the cash expended for equipment not equaling the increase in the Equipment account during the year would be:
1. Some equipment owned at the beginning of the year was disposed of during the year. This would offset some of the acquisitions made during the year, thus causing the net increase in the Equipment account to be less than the amount acquired.
2. Some acquisitions of equipment may have been made for something other than cash. Other consideration such as inventory or shares of stock could have been given instead of cash. This would cause the Equipment account to increase without affecting the amount of cash disbursed.
3. Some acquisitions of equipment may have been made by giving a down payment in cash and a promissory note for the balance. Because the cash flow statement shows only the amount of cash expended, the down payment would be the amount that would appear, not the entire purchase price of the equipment.
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a. True b. False Indicate whether the statement is true or false
The interest rate used by the creditor to discount the future cash flows of an investment in a restructured loan is the
A) current market rate. B) rate specified in the restructuring agreement. C) original contract rate. D) weighted average rate.
Use the following selected information from Whitman Corp. to determine the Year 2 and Year 1 trend percentages for cost of goods sold using Year 1 as the base. Year 2Year 1Net sales$276,200 $231,400 Cost of goods sold 151,900 129,590 Operating expenses 55,240 53,240 Net earnings 27,820 19,820
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Identify the linking verb in the sentence. Ms. Dion may be the most versatile vocalist performing today