A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statementsEnd of this yearEnd of prior year$145,000$97,000560,000830,00075,00086,00013,00049.000Accounts receivableCost of goods soldSales revenueAccounts payableInventorySalary payableSalary expense*Relates solely to the acquisition of inventoryWhat will appear in the operating activities section related to accounts receivable?ⒸA. The increase of $48,000 will be subtracted from net incomeOB. The increase of $48,000 will be added to sales revenue.OC. The increase of $48,000 will be subtracted from sales revenueOD. The increase of $48,000 will be added to net income67,000105,00010,00045,000

In the indirect method of cash flows, in cash from operating activities , adjustments are made to…

Answered: $145,000 560,000 830,000 75,000 86,000…

Business

Accounting

$145,000 560,000 830,000 75,000 86,000 13,000 49,000 unts receivable? $97,000 67,000 105,000 10,000 45,000

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter5: Inventories And Cost Of Goods Sold

Section: Chapter Questions

Problem 5.17E

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

A company uses the indirect method to prepare the statement of cash flows. It presents the following data on its financial statements
End of this year
End of prior year
$145,000
$97,000
560,000
830,000
75,000
86,000
13,000
49.000
Accounts receivable
Cost of goods sold
Sales revenue
Accounts payable
Inventory
Salary payable
Salary expense
*Relates solely to the acquisition of inventory
What will appear in the operating activities section related to accounts receivable?
ⒸA. The increase of $48,000 will be subtracted from net income
OB. The increase of $48,000 will be added to sales revenue.
OC. The increase of $48,000 will be subtracted from sales revenue
OD. The increase of $48,000 will be added to net income
67,000
105,000
10,000
45,000

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