Reliance Corporation Has Provided the Following Information for the Year

question 75

Multiple Choice

Reliance Corporation has provided the following information for the year ended December 31,2019: • The equipment account balance increased $200,000.
• The equipment accumulated depreciation account balance increased $35,000.
• Equipment costing $50,000 was sold during the year resulting in a $10,000 gain.
• Depreciation expense recorded on the equipment during the year was $65,000.
Which of the following statements is correct with respect to determining cash flow from operating activities?

• A)Using the indirect method,net income is increased by the $30,000 increase in the accumulated depreciation account balance.
• B)Using the indirect method,net income is decreased by the $30,000 sales price of the equipment.
• C)Using the indirect method,net income is increased by the $65,000 depreciation expense.
• D)Using the indirect method,net income is increased by the $10,000 gain on the sale of the equipment.

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Definitions:

Limiting Reagent

The reactant in a chemical reaction that is completely consumed first, limiting the amount of product formed.

Hydrogen

A chemical element with the symbol H and atomic number 1, it is the lightest and most abundant chemical substance in the universe.

Oxygen

A chemical element (symbol O) with atomic number 8, essential for most forms of life and crucial in combustion processes.

Limiting Reactant

The reactant in a chemical reaction that is completely consumed first, limiting the amount of product that can be formed.