Note II describes how MWW accounts for its store opening costs (see page A-50).

a. Explain how capitalizing the store opening costs and amortizing them over three years affects the cash flow statement in comparison with simply expensing these costs as they occur.

b. Would changing the method of accounting for store opening costs affect MWW’s cash flow? Explain.

c. How might a user’s interpretation of MWW’s cash flows be affected by the accounting treatment for store opening costs?

d. Calculate MWW’s cash from operations assuming that it capitalized $250,000 in store opening costs in fiscal 2001 and amortized $417,000.