ACC 132

Question 1

in a statement of cash flows, it changes in prepaid expenses would be classified as a noncash item that is not adjusted on the statement of cash flows

Answer

true

Question 2

When a company prepares the statement of cash flows under the indirect method an increase in depreciation expense will also increase the net cash provided by operating activities

Answer

true

Question 3

Managers should pay little attention to bottleneck operations because they have limited capacity for increased output

Answer

true

Question 4

In a decision to drop a segment, the opportunity cost of the space occupied by the segment would be the profit that could be derived from the best alternative use of the space

Answer

true

Question 5

Variable costs are always relevant costs

Answer

true

Question 6

When computing the net cash provided by operating activities under the indirect method on the statement of cash flows, a decrease in common stock would be added to net income

Answer

true

Question 7

Under the indirect method of determining the net cash provided by operating activities on the statement of cash flows, increases in current assets such as prepaid expenses are subtracted from net income

Answer

true

Question 8

One of the dangers of allocating common fixed costs to a product line is that such allocations can make the line appear less profitable than it really is

Answer

true

Question 9

A sunk cost is a cost that has already been incurred but that can be avoided at least in part depending on the action a manager takes

Answer

true

Question 10

Activities such as purchases of inventory on account should be included as part of a company’s operating activities of the statement of cash flows

Answer

true

Question 11

Only the variable costs identified with a product are relevant in a decision concerning whether to eliminate the product

Answer

true

Question 12

A cost that will be incurred regardless of which course of action a manager takes is relevant to the managers decision

Answer

true

Question 13

Two of more different products that are manufactured in the same production period are joint products

Answer

true

Question 14

A book value of old equipment is not a relevant cost in a decision

Answer

true

Question 15

Transactions that involve acquiring or disposing of noncurrent assets are generally classified as an investing activity on the statement of cash flows

Answer

true

Question 16

A statement of cash flows increases in a company’s capital stock accounts are treated as an increased source of cash

Answer

true

Question 17

Using the indirect method to prepare the statement of cash flows, depreciation expense is a deduction from the net income

Answer

true

Question 18

All future costs are relevant in decision making

Answer

true

Question 19

Defective units should be detected and scrapped or reworked after the bottleneck

Answer

true

Question 20

All other things equal, it is profitable to continue processing a joint product after the split-off point when the incremental revenue from further processing exceeds the incremental cost

Answer

true

Question 21

Cash payments to retire bonds payable are reported as a cash outflow in the statement of cash flows

Answer

true

Question 22

Lending money to another entity( such as a subsidiary) is classified as a financing activity

Answer

true

ACC 132

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