Wilson Company Reported Net Income of $105,000 for the Year

question 119

Multiple Choice

Wilson Company reported net income of $105,000 for the year ended December 31, 2017. During the year, inventories decreased by $15,000, accounts payable decreased by $20,000, depreciation expense was $18,000 and a gain on disposal of equipment of $9,000 was recorded. Net cash provided by operating activities in 2017 using the indirect method was

• A) $101,000.
• B) $109,000.
• C) $120,000.
• D) $118,000.

---

Definitions:

Absorption Costing

A bookkeeping approach that incorporates every manufacturing expense, both steady and fluctuating, into the product's total cost.

Net Operating Income

The profit generated from a company's everyday business operations, excluding expenses and taxes.

Fixed Manufacturing Overhead

The total of all costs that remain constant regardless of the level of production, including expenses such as rent, utilities, and salaries of permanent staff in a manufacturing setting.

Variable Costing

An accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, excluding fixed overhead costs.