(Appendix 14A) the Change in Each of Kendall Corporation's Balance

question 21

Multiple Choice

(Appendix 14A) The change in each of Kendall Corporation's balance sheet accounts last year follows:
Kendall Corporation's income statement for the year was:
There were no sales or retirements of property, plant, and equipment and no dividends paid during the year. The company pays no income taxes and it did not purchase any long-term investments, issue any bonds payable, or repurchase any of its own common stock. The net cash provided by (used in) operating activities on the statement of cash flows is determined using the direct method.
-Using the direct method,the cost of goods sold adjusted to a cash basis would be:

• A) $180,000
• B) $174,000
• C) $177,000
• D) $186,000

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Definitions:

Fair Value Method

An accounting approach that estimates the price of an asset or liability based on current market conditions.

Bonds

Long-term debt securities issued by corporations, municipalities, or governments that pay periodic interest payments to investors.

Fair Value

A measure of the estimated price at which an asset could be bought or sold or a liability settled, under current market conditions.

Passive Investments

Investments in which the investor does not actively manage or influence the operation of the asset, such as stocks or mutual funds.