A Company Uses the Indirect Method to Prepare the Statement

question 46

Multiple Choice

A company uses the indirect method to prepare the statement of cash flows.It presents the following amounts on its financial statements. $$\begin{array} { | l | r | r | } \hline & \text { End of this year } & \text { End of prior year } \\\hline \text { Accuunts receivable } & \$ 110,000 & \$ 100,000 \\\hline \text { Cost af gouds sald } & 560,000 & \\\hline \text { Sales revenue } & 830,000 & \\\hline \text { Accounts payable* } & 75,000 & 67,000 \\\hline \text { Inventary } & 86,000 & 105,000 \\\hline \text { Salary payable } & 13,000 & 10,000 \\\hline \text { Salary exgense } & 49,000 & 45,000 \\\hline\end{array}$$ *Relates solely to the acquisition of inventory
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What will appear in the operating activities section related to accounts payable?

• A)The increase of $8,000 will be added to net income.
• B)The increase of $8,000 will be subtracted from net income.
• C)The increase of $8,000 will be subtracted from cost of goods sold.
• D)The increase of $8,000 will be added to cost of goods sold.

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Definitions:

Moral Development

The process of learning, understanding, and applying ethical principles and values, shaping one's character and actions.

Ethical Choice

Decision-making based on moral principles and values, aiming to do what is right and beneficial.

Instrumental Stage

Instrumental stage refers to a phase where actions are performed primarily for the purpose of achieving an external goal or reward, often discussed in the context of moral development.

Moral Development

The process through which individuals develop proper attitudes and behaviors toward other people in society, based on social and cultural norms, rules, and laws.