Frye Company Uses the Direct Method to Prepare Its Statement

question 72

Multiple Choice

Frye Company uses the direct method to prepare its statement of cash flows. The company had the following cash flows during 2011:

See information regarding Frye Company above. The net cash provided by (used in) operating activities is

• A) $60,000.
• B) $40,000.
• C) $30,000.
• D) $(20,000).

---

Definitions:

Federal Income Tax

A charge imposed by the federal government of the United States on the yearly income of individuals, corporations, trusts, and various legal entities.

Withholding Allowance

Withholding Allowance refers to an exemption that reduces the amount of income tax an employer deducts from an employee's paycheck, based on their personal and dependent status.

Federal Income Tax

An annual financial obligation required by the federal government from individuals, corporations, trusts, and other lawful entities.

Gross Earnings

The total amount of income received before any deductions or taxes are subtracted.