The Following Selected Account Balances Appeared on the Financial Statements

question 83

Multiple Choice

The following selected account balances appeared on the financial statements of the Washington Company. Use these balances to answer the questions that follow.
$\begin{array}{lr}\text { Accounts receivable, Jan. } 1 & \$ 13,000 \\\text { Accounts receivable, Dec. } 31 & 9,000 \\\text { Accounts payable, Jan. 1 } & 4,000 \\\text { Accounts payable, Dec. } 31 & 7,000 \\\text { Inventory, Jan. 1 } & 10,000 \\\text { Inventory, Dec. } 31 & 15,000 \\\text { Sales } & 56,000 \\\text { Cost of goods sold } & 31,000\end{array}$ The Washington Company uses the direct method to calculate net cash flow from operating activities. Assume that all accounts payable are owed to merchandise suppliers.
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-Income tax expense was $175,000 for the year. Income tax payable was $30,000 and $40,000 at the beginning and end of the year, respectively. Cash payments for income tax reported on the statement of cash flows using the direct method is

• A) $175,000
• B) $165,000
• C) $205,000
• D) $215,000

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Definitions:

International Council

A global organization or body consisting of members from different countries, formed to address mutual concerns, promote international cooperation, and facilitate dialogue on global issues.

Rerum Novarum

An encyclical issued by Pope Leo XIII in 1891, addressing the condition of the working classes, advocating for workers' rights, and condemning both socialism and unfettered capitalism.

Welfare Capitalism

A system where corporations provide social welfare services to their employees in order to discourage governmental intervention and unionization.

Mann Act

A federal law passed in 1910 in the United States that made it illegal to transport women across state lines for the purpose of prostitution or debauchery, or for any other immoral purpose.