Assume the Following Information from the Financial Statements of ReStateM

question 48

Multiple Choice

Assume the following information from the financial statements of ReStateM Company:
Net income $10,000
Depreciation expense $2,000
Salaries expense $5,000
Deferred income taxes $1,000
Change in accounts receivable $2,000
Change in accounts payable -$3,000
Change in inventory -$4,000
Capital expenditures $5,000
The change in net working capital for ReStateM Company is:

• A)Increase $7,000
• B)Decrease $7,000
• C)Increase $1,000
• D)Decrease $1,000

Distinguish between different methods of depreciation and their impact on financial statements.

Recognize the role and structure of worksheets in the accounting cycle.

Understand the concept of contra-asset accounts and how they relate to financial statements.

Comprehend and apply the Sarbanes-Oxley Act requirements related to financial reporting.

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Definitions:

Marginal Cost

The extra expense associated with manufacturing an additional unit of a product or service.

Average Fixed Cost

The fixed cost divided by the quantity of output, representing the fixed cost per unit of output.

Total Fixed Costs

The sum of all costs that remain constant regardless of the level of production or output in a business.

Variable Costs

Costs that change in proportion to the good or service that a business produces.