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irina1246 [14]
2 years ago
8

When preparing the statement of cash flows using the indirect​ method, which statement is​ INCORRECT? A. Losses on the sale of l

ongminusterm assets are subtracted from net income. B. Increases in current liabilities are added to net income. C. Depreciation expense is added to net income. D. Gains on the sale of longminusterm assets are subtracted from net income.
Business
1 answer:
ExtremeBDS [4]2 years ago
3 0

Answer:

The correct answer is Option A.

Explanation:

A. Losses on the sale of longminusterm assets are subtracted from net income - This is incorrect because on losses on sale of an asset are usually added to the net income to avoid double-counting of income. Under the investing section of the cash flows, the proceed received on disposal is recorded there as inflow, if the losses realized on the disposal are subtracted, there would be a double-counting because the losses had already reduced the net income before.

B. Increases in current liabilities are added to net income - This is an inflow of cash, so it is usually added back.

C. Depreciation expense is added to net income - The explanation under Option A above applies but only that depreciation is a non-cash item, which already reduced the net income and it has to be added back to reinstate the net income.

D. Gains on the sale of longminusterm assets are subtracted from net income - Explanation under Option A applies.

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Free_Kalibri [48]

Answer: False

Explanation:

Different departments incur different types of costs based on the product that they are producing. It would therefore not be right to use the same rate for all departments as it might capture cost inadequately.

The overhead rate should always take into account the unique circumstances of a department such that costs can be assigned as accurately as possible.

3 0
2 years ago
Do u have a mil what would u do wit it<br> how would u invest
Sonja [21]

Answer:

I would save a quarter of it for university, I would pay off and debt then I would invest in shares and donate to charity. also buy a car.

Explanation:

this is a personal based question so it's what you would spend the mil on. this is what I would spend it on.

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2 years ago
Hibiscus Co has a debt-equity ratio of 0.80. The firm is analyzing a new project which requires an initial cash outlay of $300,0
morpeh [17]

Answer:

$321,600

Explanation:

debt equity ratio = debt / equity

since the debt to equity is 0.8, that means that for every $ invested from equity, $0.80 will be borrowed. If the new project requires an initial cash outlay of $300,000:

  • then $300,000 / $1.80 = $166,667 will be new equity
  • and $133,333 will be new debt

total cost of initial outlay including flotation costs = ($166,667 x 1.09) + ($133,333 x 1.0495) = $181,667 +  $139,933 = $321,600

flotation costs include all the costs associated with issuing new stocks or taking new debt.

8 0
3 years ago
Sarah takes out a loan today for $26,000 at an interest rate of 2 percent a year. She plans to repay the loan after 5 years. How
Trava [24]

Answer:

$28,706.10

Explanation:

The computation of the amount of pay is shown below:

Here we have to find the future value by using the following formula

Future value = Present value × (1 + interest rate)^number of years

= $26,000 × (1 + 0.02)^5

= $28,706.10

We simply applied the above formula so that the amount of pay could be come and the same is to be considered

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2 years ago
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storchak [24]
$9.40
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so $7.99/ .85 = $9.40
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2 years ago
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