Krech Corporation's Comparative Balance Sheet Appears Below

question 70

Multiple Choice

Krech Corporation's comparative balance sheet appears below:
The company's net income (loss) for the year was ($3,000) and its cash dividends were $3,000. It did not sell or retire any property, plant, and equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities.
-Which of the following is correct regarding the operating activities section of the statement of cash flows?

• A) The change in Accounts Receivable will be subtracted from net income; The change in Inventory will be added to net income
• B) The change in Accounts Receivable will be added to net income; The change in Inventory will be subtracted from net income
• C) The change in Accounts Receivable will be added to net income; The change in Inventory will be added to net income
• D) The change in Accounts Receivable will be subtracted from net income; The change in Inventory will be subtracted from net income

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Definitions:

Actual Call Price

The actual price at which a callable bond or other financial instrument can be redeemed by the issuer before its maturity date.

Intrinsic Value

The inherent, true value of an asset, investment, or company, based on its fundamental characteristics and financial health.

Binomial Value

A value derived from the binomial options pricing model, representing the potential future value of an option based on different paths the underlying asset's price can take.

Intrinsic Value

The perceived or calculated value of a company, currency, or asset based on its true fundamental value, excluding market fluctuations.