4. All of the following could explain the difference between the accounting treatment for depreciation and cost depletion except _____________.

a.

depletion applies to natural resources while depreciation applies to plant and equipment

b.

depletion refers to the physical exhaustion or consumption of the asset while depreciation refers to the wear, tear, and obsolescence of the asset

c.

many formulas are used in computing depreciation but only one is used to any extent in computing depletion

d.

the cost of the asset is the starting point from which computation of the amount of the periodic charge is made to operations for depreciation, but the fair value reassessed each year as the starting point for the periodic charge for depletion

To arrive at net cash provided by operating activities, it is necessary to report revenues and expenses on a cash basis. This is done by _______________.

a.

estimating the percentage of income statement transactions that were originally reported on a cash basis and projecting this amount to the entire array of income statement transactions.

b.

re-recording all income statement transactions that directly affect cash in a separate cash flow journal.

c.

eliminating all transactions that have no current or future effect on cash, such as depreciation, from the net income computation.

d.

eliminating the effects of income statement transactions that did not result in a corresponding increase or decrease in cash.