AOS Industries Statement of Cash Flows for 2008

question 72

Multiple Choice

AOS Industries Statement of Cash Flows for 2008

Consider the above statement of cash flows. In 2008, AOS Industries had contemplated buying a new warehouse for $3 million, the cost of which would be depreciated over 10 years. If AOS Industries has a tax rate of 25%, what would be the impact for the amount of cash held by AOS at the end of the 2008?

• A) It would have $3,000,000 less cash at the end of 2008.
• B) It would have $2,925,000 less cash at the end of 2008.
• C) It would have $1,500,000 less cash at the end of 2008.
• D) It would have an additional $7,500,000 in cash at the end of 2008.

Understand the concept of social comparison theory.

Identify and analyze group norms.

Recognize the factors that enhance individual performance in group settings.

Understand the dynamics and consequences of groupthink.

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Definitions:

Ending Inventory Cost

The total value of all the goods a company has in stock at the end of a financial period, calculated using one of several accounting methods.

Physical Inventory

A process of counting the actual inventory on hand at a particular point in time.

Units Available

The total quantity of goods a company has ready for sale or production usage at any given time.

Retail Method

An accounting method to estimate inventory value by applying a consistent markup to the cost of merchandise, used often in the retail industry.