Lopez Corp

question 143

Multiple Choice

Lopez Corp. uses the indirect method to prepare its statement of cash flows. Refer to the following information for the year 2014: 1) Long-Term Notes Payable, beginning balance, $80,000
2) Long-Term Notes Payable, ending balance, $76,000
3) Common Stock, beginning balance, $3,000
4) Common Stock, ending balance, $26,000
5) Retained Earnings, beginning balance, $75,000
6) Retained Earnings, ending balance, $115,000
7) Treasury Stock, beginning balance, $6,000
8) Treasury Stock, ending balance, $10,000
9) No stock was retired.
10) No treasury stock was sold.
11) During 2014, the company repaid $36,000 of Long-Term Notes Payable.
12) During 2014, the company borrowed $32,000 on a new Note Payable.
13) Net income for the year was $49,000.
"14) Assume all dividends declared during the year were paid.
How much was the net cash flow from financing activities?"

• A)$2,000
• B)$10,000
• C)$(6,000)
• D)$6,000

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Definitions:

Perpetual Inventory System

An inventory system that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

Cost of Goods Sold

Represents the direct costs attributable to the production of the goods sold by a company, including the cost of the materials and labor used to create the product.

LIFO

An inventory valuation method that assumes the items most recently put into inventory are the first ones sold.

Ending Inventory

The overall worth of items ready for sale after an accounting period, determined by starting inventory added to purchases and then subtracting the cost of goods sold.