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Over the past two years, a firm reported higher operating cash flow as a result of securitizing its accounts receivable and from increasing income tax benefits from employee stock options. The tax ben

A. Both sources are sustainable.
B. Neither source is sustainable.
C. Only one of these sources is sustainable.

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As part of its working capital management program, Rotan Corporation has an accounts payable financing arrangement with the First National Bank. The bank pays Rotans vendors within 30 days of the invo

A. Both will decrease.
B. Neither will decrease.
C. Only one will decrease.

Long-lived assets cease to be depreciated when the firms management decides to dispose of the assets by:

A. sale.
B. abandonment.
C. Exchange for another asset.

An analyst is comparing two firms, one that reports under IFRS and one that reports under FASB standards. An analyst is least likely to do which of the following to facilitate comparison of the compan

Add the LIFO reserve to inventory for a U.S.-based firm that uses LIFO.
B. Add the present values of each firms future minimum operating lease payments to both assets and liabilities.
C. Adjust the income statement of one of the firms if both have significant unrealized gains or losses from changes in the fair values of trading securities.

If Lizard Inc., a lessee, treats a 5-year lease as a finance lease with straight line depreciation rather than as an operating lease:

A. It will have greater equity at lease inception.
B. Its operating income will be less in the first year of the lease.
C. Its CFO will be greater and CFF will be less in the second year of the lease.

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