Answer True or False. Briefly explain the false ones. (40 points) 22. The balanc

Question

Answer True or False. Briefly explain the false ones. (40 points) 22. The balance sheet pres business for a period of time·dt is usually one year. he income and expenses of the 23. The depreciation expense is very important from the financial point, because depending on the method used to calculate it, this will be the disbursement 24. The net loss is always a use of funds. 25. The higher or higher amount of accounts receivable in relation to the previous year. means that we have a greater number of sources of funds. 26. Budgets are an excellent planning and control tool. 27. The cash budget does not need to be prepared if the cash flow statement is prepared 28. If the "working capital ratio" is greater than 1, it means that the net working capital is also negative 29. Keeping accounts receivable "accounts receivable" low is part of a conservative strategy of current assets 30. All inventories are con nancing

Explanation / Answer

22.) The given statement is False.

Income and expenses are expressed in Income Statement for the respective year where Balance sheet is a statement of Assets, Laibilities and equity at a particular instant of time.

23.) The given statement is False.

This is because depreciation is not a cash expense. It is the ammortization of upfront expense made in a particular year. Hence, there will be no disbursement against the depreciation expense but it can be claimed as an expense as per the existing rules of IRS, thus, improving cash flows for the business.

24.) The given statement is False.

This is because net loss can be due to depriciation too, which is not the use of funds but an additional expense which can be claimed as per rules of IRS.

25.) The given statement is False.

This is because higher amount of account receivable relate to higher credit sales in the current period or the existing creditors have not paid their outstandings as it was expected in the current period.

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