The Following Information Has Been Taken from the Consolidation Worksheet

question 2

Multiple Choice

The following information has been taken from the consolidation worksheet of Graham Company and its 80% owned subsidiary, Stage Company.(1.) Graham reports a loss on sale of land (to an outside party) of $5,000. The land cost Graham $20,000.(2.) Noncontrolling interest in Stage's net income was $30,000.(3.) Graham paid dividends of $15,000.(4.) Stage paid dividends of $10,000.(5.) Excess acquisition-date fair value over book value amortization was $6,000.(6.) Consolidated accounts receivable decreased by $8,000.(7.) Consolidated accounts payable decreased by $7,000.Using the indirect method, where does the decrease in accounts payable appear in a consolidated statement of cash flows?

• A) $7,000 increase to net income as an operating activity.
• B) $7,000 decrease to net income as an operating activity.
• C) $5,600 increase to net income as an operating activity.
• D) $5,600 decrease to net income as an operating activity.
• E) $7,000 increase as a financing activity.

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Definitions:

A Priori Causal Theories

Theoretical assumptions about causality that are not derived from observation but are instead formulated beforehand.

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Understanding of the customs, practices, and social norms of a particular group, society, or community, often gained through experience and education.

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An approach in psychology focusing on observable behaviors and the ways in which learning occurs through interactions with the environment.

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