Kraco Corporation Reported 2010 Net Income of $450,000,including the Effects

question 36

Multiple Choice

Kraco Corporation reported 2010 net income of $450,000,including the effects of depreciation expense of $60,000,and amortization expense on a patent of $10,000.Also,cash of $50,000 was borrowed on a 5-year note payable.Based on this data,total cash inflow from operating activities using the indirect method for 2010 was: 

• A) $570,000
• B) $520,000
• C) $470,000
• D) $440,000

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Definitions:

Social Security Taxes

Taxes collected from employees and employers to fund the Social Security program, which provides retirement, disability, and survivorship benefits.

Income Cap

A limit on the amount of income an individual or entity can receive, often used in tax or investment contexts to limit earnings or tax benefits.

Exemption

Exemption is a deduction allowed by law to reduce the amount of income that would otherwise be taxed. It can also refer to specific types of income or transactions that are legally excluded from taxation.

Terminal Illness

A disease or condition that is deemed incurable or irreversible and is expected to lead to the death of the patient within a short period of time.