A Statement of Cash Flows Should Be Issued by a Profit-Oriented

question 15

Multiple Choice

A statement of cash flows should be issued by a profit-oriented business

• A) As an alternative to the statement of income and retained earnings
• B) Only if the business classifies its assets and liabilities as current and noncurrent
• C) Only when two-year comparative balance sheets are not issued
• D) Whenever a balance sheet and a statement of income and retained earnings are issued

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Definitions:

Personal Property

Property that includes movable items such as furniture, cars, and investments, as opposed to real estate.

200% Declining-Balance Rate

A method of accelerated depreciation allowing for a double rate of depreciation on assets, compared to the straight-line method.

MACRS

The Modified Accelerated Cost Recovery System, a method of depreciation for tax purposes that allows faster write-offs on property.

Mid-Month Convention

A rule for depreciation of business assets that assumes assets are acquired and disposed of at the midpoint of the month.