Walker Inc $\quad$ $\quad$ $\quad$ $\quad$ $\quad$

question 58

True/False

Walker Inc. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Walker Inc.
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Comparative Balance Sheet
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ December 31, 2014 and 2013
$\begin{array}{lrrr} & 2014 & 2013& \text { Increase/decrease } \\\text { Cash } & \$ 42,000 & \$ 25,000 & \$ 17,000 \\\text { Accounts Receivable } & 32,000 & 55,000 & (23,000) \\\text { Inventory } & (180,000) &123,000 & 57,000 \\ \text { Total assets} & \$254,000 &\$203,000 & \$51,000 \\\hline\end{array}$ The change in Inventory will be shown as a negative cash flow in the adjustments to Net Income.

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Definitions:

Profit (Loss) Test

A financial assessment to evaluate the profitability or loss of a business operation or investment.

Return on Total Assets

A financial ratio that measures a company's profitability relative to its total assets.

Income Tax Expense

The amount of money that a company is required to pay to the government based on its taxable income.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time.