The Following Items Were Reported on the Balance Sheets and Income

question 66

Multiple Choice

The following items were reported on the balance sheets and income statements of Marshall Company: How would the change in accounts payable be reported in the operating activities section of the statement of cash flows under the indirect method?

• A)As an addition to operating expenses.
• B)As a deduction from operating expenses.
• C)As an addition to net income.
• D)As a deduction from net income.

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Definitions:

Interim Reporting

The financial statements issued by a company for a period less than its full fiscal year, often quarterly, to provide timely information to investors.

Tax Liability

The total amount of tax owed by an individual or corporation to a taxing authority.

Dollar-Value LIFO

An inventory valuation method that uses the last-in, first-out (LIFO) principle, but adjusts for changes in the value of money over time.

Current Cost

The expense required to replace an asset or an inventory item at the present time, as opposed to its historical purchase price.