Wessen Company Reports Net Income of $180,000 for the Year

question 25

Multiple Choice

Wessen Company reports net income of $180,000 for the year ended December 31,2013.It also reports $45,800 depreciation expense,$21,410 amortization expense,and a $15,000 gain on the sale of machinery.Its comparative balance sheets reveal a $28,300 increase in accounts receivable,$20,400 decrease in accounts payable,$10,470 increase in prepaid expenses,and $33,140 decrease in wages payable.What net cash flows are provided (used) by operating activities using the indirect method?

• A)($140,200)
• B)$133,490
• C)$139,900
• D)($133,490)
• E)$78,300

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Definitions:

Utilization

The measure of how efficiently resources, such as labor, equipment, and capacity, are being used in the production or service delivery process.

Break-even Point

The level of production or volume of sales at which total revenues equal total expenses, resulting in no net profit or loss.

Variable Cost

Costs that vary directly with the level of output or production, such as materials and labor.

EMV

Expected Monetary Value, a concept in decision making and risk management that calculates the average outcome when the future includes scenarios that may or may not happen.