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Payne Urology (PU), a non-profit business, had revenues in 2012 of $96,000. Expenses other than depreciation were 75% of revenues and Depreciation was $10,000. All revenues were collected in cash, and all expenses, excluding depreciation, were paid in cash during the year. No other assets were purchased, and no money was borrowed.

A. Construct PU's Income Statement.
B. What was PU's Cash Flow for the year?
C. If (under GAAP) PU changed its depreciation method so that the Depreciation Expense doubled, what would be the new Net Income?
D. Again, if (under GAAP) PU changed its depreciation method so that the Depreciation Expense tripled, what would be the Cash Flow?
E. Comment on the results.

 

Basic Finance, Finance

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