Krech Corporation's Comparative Balance Sheet Appears Below

question 115

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 Payable will be added to net income; The change in Accrued Liabilities will be subtracted from net income
• B) The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be added to net income
• C) The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be subtracted from net income
• D) The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be added to net income

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Definitions:

Performance Measures

Metrics or indicators used to assess the efficiency, effectiveness, and success of an organization's activities.

Net Operating Income

The profit generated from a company's everyday business operations, calculated by subtracting total operating expenses from total revenue.

Turnover

Refers to the rate at which inventory is sold and replaced or the volume of business conducted within a specific period, often used in analyzing business efficiency.

Return On Investment

A measure of financial performance calculated as the net profit divided by the total investment.