21A) Curly, Larry & Moe Company had net income of $130,000 for the current year.
ID: 2595544 • Letter: 2
Question
21A) Curly, Larry & Moe Company had net income of $130,000 for the current year. The income statement reveals depreciation expenses of $8,000; a loss of $12,000 and gains of $6,000. Comparative balance sheets reveals that certain CA increased $10,000 and other CA accounts decreased $14,000; some of the CL went up $14,000 and others went down $21,000. Determine the net cash flows from operating activities using the indirect method. a. $201,000 b. $155,000 c. $187,000 d. None of the above.
B) Assume you are analyzing two companies in the same industry and you want to know which company uses its assets more effectively to generate revenues. You should use which ratio: a. Net Income ratio c. Debt to asset ratio b. Current ratio d. Asset turnover ratio
Explanation / Answer
A)
Net Income = 130000
Add: Depreciation Expense = 8000
Add: Losses = 12000
Less: Gains = 6000
Add: Net decrease in CA = 4000
Less: Net decrease in CL = 7000
Net cash flows from operating activities = 141000
Answer is d. None of the above.
B)
Answer is d. Asset turnover ratio
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.