FMVA Accounting Fundamentals - Qualified Assessm

December 2020

Notes
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Qualified Assessment Questions

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Accounting Fundamentals Qualified Assessment
All Amounts Denominated in US$MM Unless Otherwise Stated

Question

9. What is the net change in working capital that would appear on the cash flow statement given the following:
i) Increase in cash of $500 iv) Decrease in prepaid expenses of $225
ii) Increase in accounts receivables of $800 v) Increase in PP&E of $950
ii) Decrease in inventories of $350 vi) Increase in accounts payable of $400

The asset can be salvaged for 10% of its original cost at the end of 2025. The usage of the asset varies over time and is
dependent on the output. What is depreciation expense for 2025?

A. -$50
B. $50
C. -$175
D. $175

Solution

A. -$50
B. $50
C. -$175
D. $175

Explanation
The change in non-cash working capital that would appear on the cash flow statement is calculated as:
Increase in accounts receivable
Decrease in inventories
Decrease in prepaid expenses
Increase in accounts payable
Change in Non-Cash Working Capital
en the following:

sset varies over time and is

-$800
$350
$225
$400
$175