Question #2327 for those who have Schweser Q Bank

[Philly1616]

Shouldn't part two be >>> for cash inputs

-COGS

so that would be -90 ???? instead of positive 90 as they have in the answer?

 

[jbnjc]

Philly1616 Wrote:
-------------------------------------------------------
> Shouldn't part two be >>> for cash inputs
>
> -COGS
>
> so that would be -90 ???? instead of positive 90
> as they have in the answer?


You need to copy and paste the entire question so we can all learn from your problems and the solution. "Show me the question!" he he..

 

[CFAHouston]

Philly, I have my schweser pro from last year, and I think your right:

From Schweser:
"Under the direct method, to find cash inputs, John must add (subtract) any increase (decrease) in inventories to cost of goods sold (COGS) and then subtract (add) the increase (decrease) in accounts payable. The calculation for Soft Corporation�s projected cash flows is as follows:

90.0 + (150.0 � 100.0)- (101.0 - 91.0) = 130.0

All three of these components are necessary to find total cash inputs under the direct method, making the correct choice 130.0."


if 90 is COGS, then its shoud be a negative number.

Also, Add (subtract) any increase (decrease) in the accounts payable balance.
Subtract (add) any increase (decrease) in the inventory balance. So, I think the above it written incorrectly.