Using the Indirect Method, Decreases in Current Assets and Increases

question 78

Multiple Choice

Using the indirect method, decreases in current assets and increases in current liabilities are both added to net income, whereas increases in current assets and decreases in current liabilities are both subtracted from net income to convert it to net cash flow. Noncash expenses such as depreciation are added back to net income.
$$\begin{array} { | r | r | r | r | r | r | r | } \hline \begin{array} { r } \text { Beginning } \\\text { Cash } \\\text { Balance }\end{array} & \begin{array} { r } \text { Cash flows } \\\text { from } \\\text { Operating } \\\text { Activities }\end{array} & \begin{array} { r } \text { Cash flows } + \\\text { from Investing } \\\text { Activities }\end{array} & \begin{array} { r } \text { Cash Flows } \\\text { From } \\\text { Operating } \\\text { Activities }\end{array} & \begin{array} { r } \text { Ending cash } \\\text { balance }\end{array} \\\hline \$ 11,283 + & \$ 37,042 + & ( \$ 16,831 ) + & ( \$ 26,397 ) = & \$ 5,097 \\\hline\end{array}$$
-A company purchases a $300,000 building,paying $200,000 in cash and signing a $100,000 promissory note.What will be reported on the statement of cash flows as a result of this transaction?

• A)A $300,000 cash outflow for investing activities.
• B)A $200,000 cash outflow for investing activities and a $100,000 cash inflow is recorded for financing activities.
• C)A $200,000 cash outflow for investing activities.
• D)A $300,000 cash outflow for investing activities and a $100,000 cash inflow is recorded for financing activities.

Analyze the social and psychological factors that influence conformity, including the context of ambiguity.

Examine the effects of group dynamics, such as group polarization and groupthink, on decision-making.

Understand the principles of obedience to authority, including the gradual escalation of commitments and the distribution of responsibility.

Investigate the differences in conformity and obedience across cultures and over time.