- (Depreciation- Chapter 10) In chapter 8 of our text we learned that Depreciation expense is a non- cash item and was added back to the operating activities of the cash flow statement using the in-direct presentation method. Briefly discuss why this activity takes place and its impact on operating activities.
- (Inventory Costing- Chapter 11) The outside reading entitled, “5 Ways to Built a Top-Performance Supply Chain, by Matthew J. Rowan, briefly discuss how the steps outlined in the reading would impact financial statement presentation. (hint: assume that practices were successfully implemented)
** Please, You have to read chapters 8-10-11 well then answer then answer the 2 Questions.
Answer preview
Discipline in purchasing ensures that companies do not overspend on unnecessary products and services. Overspending is a cash outflow from the business as money is paid out to sellers. It affects the income statement by increasing expenses. Hospitals and health facilities which have put a tight leash on their purchases will see a decrease in the expenses column of their income statement. An example given in the reading is that of hospitals that use sixty to a hundred types of gloves, the writer relates that top performers in the health industry use half the amount. Also, when hospitals refrain from decisions that require them to have fixed investments, they have more liquidity which is presented in the income statement. The cash at hand is likely to be more. However, if the hospital does engage in the accumulation of long-term investments and purchases, it will show an increase in capital. Additionally, hospitals should also take another step in avoiding supply chain decisions that are not in line with the organization’s mission
[429 Words]
