Why do we exclude depreciation expense and the gain or loss on sale of an asset from

Question:

Why do we exclude depreciation expense and the gain or loss on sale of an asset from the operating activities section of the statement of cash flows under the direct method?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Financial Accounting

ISBN: 978-0078025549

3rd edition

Authors: J. David Spiceland, Wayne Thomas, Don Herrmann

See More Books

Question Posted: Jul 13, 2016 03:49 AM

See More Questions

The following is a copy of the auditors working paper relating to the testing of depreciation expense for the client New Millennium Ecoproducts. Required (a) The opening book value balances of the...
If depreciation expense is not a cash flow, why do we have to subtract it and add it back? Why not just ignore it?
Zoe Corporation bought a large piece of equipment for $9,000,000 during 2013. When the company purchased the equipment, it estimated a useful life of five years ignoring the year of acquisition, and...
As you might imagine, the chart of accounts for a manufacturing firm would be different from that of a service firm. Not surprisingly, service firms differ so much that software now exists for almost...
What is the fraud scale, and how does it relate to pressure, opportunity, and integrity?
A bond issued by Google Corp. has a face value of $1000, matures in 4 years and has a 7 percent annual coupon. It currently sells at a yield to maturity of 8 percent. Calculate: (a) Current yield.
What is the payback period for the project described in Problem 4.21 if the maintenance increases by $\$ 500 /$ year (after the first year)? Data from in problem 4.21 What is the payback period for...
Identifying variable costs, committed fixed costs, and discretionary fixed costs Required: Classify each of the following costs for a jeans manufacturing company as a variable cost, committed fixed...
Write a C program using the fork() system call that calculate the factorial in the child process. The number will be provided from the command line. For example, if 5 is passed as a parameter on the...
The figure shows reversed-phase retention data for three compounds. a. Identify whether compounds A, B, and C are weak acids or bases. For each compound, what is the pKap K a and the retention factor...
Changes in current assets and current liabilities are used in determining net cash flows from operating activities. Changes in which balance sheet accounts are used in determining net cash flows from...
Explain what we mean by noncash activities and provide an example.
A light ray travels through medium 1 , index of refraction $n_{1}=1.1$, into medium 2, index of refraction $n_{2}=1.5$ (Figure P33.55). At what angle with respect to the normal to the interface...
Prepare a flexible budget from the following data made available in respect of a half-yearly period and forecast the working results at 70, 85, and 100 per cents of capacity when the respective sales...
Cardiex is a world-leading manufacturer of implantable defibrillators based in Maastricht (Netherlands). Gustav Lund, Cardiexs senior vice president for production and logistics, is trying to decide...
The following particulars are given: current unit price, 1,000; unit variable cost, 500; fixed costs, 30 lakh. The following two suggestions are under the consideration of the management of an...
The Minneapolis-based medical instruments firm is considering starting an assembly operation in Bratislava (Slovakia) and is hesitating between establishing it as a branch or a subsidiary. The...
Purchasing power parity and the Argentine currency board (C). In 2002, Argentina suffered from inflation at the rate of 25 percent (still 1. 5 percent in the United States): a. What should be the...
For a study in which they assessed scores on a scale dependent variable, researchers reported a coefficient alpha of 0.81 for that measure, as well as a correlation of 0.67 between that measure and a...
Synthesize the products by drawing out reagents and intermediates along the way. `N H. OH HO HO
Continental Airlines signed contracts with its major creditors (mostly banks) that require the company to maintain a minimum cash balance of $600 million, a minimum shareholders equity balance of...
Fortune magazine ran an article titled New Ethics or No Ethics? Questionable Behavior Is Silicon Valleys Next Big Thing, which recounts stories of Internet companies that aggressively inflate their...
The following quote was taken directly from the audit report written by Price water house Coopers on the 2009 financial statements of Kroger. In our opinion, the accompanying consolidated balance...
given l o g x 5 = l o g 5 x solve for x
Solve the formula 8 x 3 y = - 1 9 for y .
Q6 Find the total amount for of the current balance for each underwriter and find out top 10 richest underwriter Q7 Create a pivot table for the entire data and find out the total current balance for...

Why do we exclude depreciation expense and the gain or loss on sale of an asset from

Question:

Step by Step Answer:

Depreciation expense has no effect on cash flows It is merely an allocati...View the full answer

Financial Accounting

Students also viewed these Managerial Accounting questions