TG Industries Is Considering Investing in a Fleet of Six

question 28

Multiple Choice

TG Industries is considering investing in a fleet of six delivery vehicles. The annual running costs are expected to total $90,000 per vehicle, including the driver's salary. The vehicles are expected to operate for a total of five years. At present TG industries uses a commercial carrier for its deliveries. The commercial carrier is expected to charge a total of $680,000 for each of the next five years to make the deliveries. What is the estimated net annual cash cost saving on delivery vehicle running cost if TG industries invests in the fleet of six vehicles?

• A)$90,000.
• B)$400,000.
• C)$310,000.
• D)$140,000.

Understand how the indirect method adjusts net income for operating cash flows.

Identify the effect of transactions on cash flows from investing and financing activities.

Understand the components and sources of information for preparing the statement of cash flows.

Understand the purpose and components of the Indirect Method for reporting cash flows.

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Definitions:

Showa

A period in Japanese history aligned with the reign of Emperor Hirohito, from 1926 to 1989, marked by significant cultural and economic changes.

Nishiki-E

A type of multi-colored Japanese woodblock printing; known for its richly colored images and complex production process, primarily used in Ukiyo-e.

Brocade Pictures

Artworks that resemble or incorporate brocade, a type of richly decorative woven fabric, often to achieve a textured or luxurious effect.

Showa

A period in Japanese history corresponding to the reign of Emperor Hirohito (1926-1989), marked by significant changes including World War II.