At the End of the First Year of Operations, the Balance

question 193

Multiple Choice

At the end of the first year of operations, the balance sheet of Huntington Beach Co.Industries had the following balances: Accounts Receivable, $5,000; Accounts Payable, $6,000; Inventory, $3,000; and Unexpired Insurance, $2,000.The corporation reported net income of $79,000 for the year, including depreciation expense of $5,000, and uses the indirect method of computing net cash flow from operating activities.Based on this information, net cash flow from operating activities is:

• A) $82,000
• B) $78,000
• C) $80,000
• D) $77,000

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Definitions:

T Account

A graphical representation of a ledger account used in accounting to depict the effects of transactions on account balances.

Horizontal Analysis

Horizontal analysis is a financial analysis technique that compares historical financial data across different periods to identify trends and changes over time.

Balance Sheet

A report detailing a company's assets, liabilities, and equity owned by shareholders at a certain moment.

Income Statement

A report detailing a company's financial activities, including income, outgoings, and net earnings or deficits, over a particular period of time.