The Net Income Reported on the Income Statement for the Current

question 89

Multiple Choice

The net income reported on the income statement for the current year was $220000. Depreciation recorded on plant assets was $35000. Accounts receivable and inventories increased by $2000 and $8000 respectively. Prepaid expenses and accounts payable decreased by $2000 and $12000 respectively. How much cash was provided by operating activities?

• A) $200000
• B) $235000
• C) $220000
• D) $255000

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Definitions:

Earned Income Tax Credit

A provision of the tax code that provides a credit or rebate to people with low earnings (income from work activities). The credit is eventually phased out if the recipient’s earnings increase.

Tax Credit

A tax incentive that allows taxpayers to subtract the amount of the credit from the total they owe to the government.

Government Cost

The financial expenses incurred by government entities in the execution of public functions and services.

Taxes Collected

The total amount of monetary charges imposed by governments on individuals, corporations, and transactions.