The following comparative information is available for Prasad Company for 2012.

Instructions(a) Determine net income under each approach. Assume a 30% tax rate.(b) Determine net cash provided by operating activities under each approach. Assume that all sales were on a cash basis and that income taxes and operating expenses, other than depreciation, were on a cash basis.(c) Calculate the quality of earnings ratio under each approach and explain your findings.

Transcribed Image Text:

LIFO FIFO Sales revenue Cost of goods sold Operating expenses (including depreciation) Depreciation Cash paid for inventory purchases $86,000 38,000 $86,000 29,000 27,000 10,000 27,000 32,000 32,000