The Following Items Were Reported on the Balance Sheets and Income

question 42

Multiple Choice

The following items were reported on the balance sheets and income statement for Bezos Corp.: $\begin{array}{lr}\text { Accounts payable, December } 31,2016 & \$ 4,000 \\\text { Accounts payable, December } 31,2017 & 48,000 \\\text { Operating expenses } & 286,000\end{array}$ How would the change in accounts payable be reported in the operating activities section of the statement of cash flows under the indirect method?

• A) As an addition to operating expenses
• B) As a deduction from operating expenses
• C) As an addition to net income
• D) As a deduction from net income

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Definitions:

Behavioral Economics

A field of economics that examines how psychological, social, cognitive, and emotional factors affect economic decisions of individuals and institutions.

Anchoring

The tendency people have to unconsciously base, or “anchor,” the valuation of an item they are currently thinking about on recently considered but logically irrelevant information.

Decision Making

The process of selecting the best course of action from several alternatives to achieve a desired goal.

Irrelevant Information

Data or facts that do not influence decision-making processes in a given context, lacking value for the question or decision at hand.