QUESTION 47

1. What is implied if the inventory account has increased?

   		Cash flow from operating activities has decreased relative to net income.
   		Cash flow from financing activities has decreased relative to net income.
   		Cash flow from financing activities has increased relative to net income.
   		Cash flow from operating activities has increased relative to net income.

QUESTION 48

1. Which of the following items would be a way to manipulate the cash flow from the operating activities amount on the statement of cash flows?

   		Including interest expense and tax expense in the calculation of cash flow from operating activities.
   		Recording an item that should be recorded as an operating activity as an investing activity.
   		The cash flow statement cannot be manipulated.
   		Adding depreciation back to net income to determine cash flow from operating activities.

QUESTION 49

1. Assuming a period of inflation, which statement is true?

   		The FIFO method understates cost of goods sold on the income statement.
   		The FIFO method understates balance sheet inventory.
   		The LIFO method understates cost of goods sold on the income statement.
   		The LIFO method overstates balance sheet inventory.

QUESTION 50

1. Which statement is false?

   		Deferred taxes are the product of temporary differences in the recognition of revenue and expense for taxable income relative to reported income.
   		Deferred taxes arise from the use of the same method of depreciation for tax and reporting purposes.
   		Temporary differences causing the recognition of deferred taxes may arise from the methods used to account for items such as depreciation, installment sales, leases, and pensions.
   		Deferred taxes arise when taxes actually paid are less than tax expense reported in the financial statements.