Allen Company Uses the Indirect Method to Prepare Its Statement $\quad$

question 104

True/False

Allen Company uses the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Allen Company
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Comparative Balance Sheet
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ December 31, 2015 and 2014
$\begin{array}{lrrr} & 2015 & 2014 & \text { Increase/decrease } \\\text { Common Stock } & \$ 28,000 & \$ 5,000 & \$ 23,000 \\\text { Retained Earnings } & 108,000 & 82,000 & 26,000 \\\text { Treasury Stock } & (9,000) & (6,000) & (3,000) \\ \text { Total equity } & 127,000 & 81,000 & 46,000 \\\hline\end{array}$ If the net income for the year was $58,000, the company must have declared $32,000 as dividends during the year.

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Definitions:

Basilar Membrane

The basilar membrane is a key structure in the cochlea of the inner ear, playing a crucial role in the process of auditory transduction by vibrating in response to sound and facilitating hearing.

Place Theory

A theory explaining how the inner ear registers the frequency of sounds, based on the location along the cochlea’s basilar membrane that sound waves peak.

Cones

Visual receptors that respond to greater light intensities and give rise to chromatic (color) sensations.

Visual Sensations

The experience derived from light stimulating the visual receptors in the eyes, leading to visual perception.