A Corporation Prepares Its Statement of Cash Flows Using the Indirect

question 122

Multiple Choice

A corporation prepares its statement of cash flows using the indirect method to report operating activities.Net income for the 2014 fiscal year was $634,000.Depreciation and amortization expense of $60,000 and $30,000 respectively were included with operating expenses in the income statement.The following information describes the changes in current assets and liabilities other than cash: $\begin{array}{lr}\text {Decrease in accounts receivable } & \$ 22,000\\\text {Increase in inventories } & 9,400\\\text {Increase prepaid expenses } &8,900\\\text {Increase in salaries payable } & 10,400\\\text {Decrease in income taxes payable } & 14,400\\\end{array}$
Determine the net cash flow provided (used) by operating activities.

• A)($692,500)
• B)$692,500
• C)$723,700
• D)($536,300)
• E)($723,700)

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Definitions:

Dullness

In medical percussion, a sound indicative of increased density in body tissues, often associated with fluid accumulation or underlying organs, as opposed to resonance typical of air-filled spaces.

Appendicitis

Inflammation of the appendix, a small organ attached to the large intestine, which can lead to serious complications if not treated.

Blumberg Sign

A clinical sign indicative of peritonitis, elicited by rebound tenderness when pressure is applied and then abruptly released.

Iliopsoas Muscle Test

A clinical examination used to evaluate the strength and integrity of the iliopsoas muscle, important for hip flexion.