A Company Uses the Indirect Method to Prepare the Statement

question 14

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 salary payable?

• A)The increase of $3,000 will be added to net income.
• B)The increase of $3,000 will be added to cost of goods sold.
• C)The increase of $3,000 will be subtracted from cost of goods sold.
• D)The increase of $3,000 will be subtracted from net income

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Definitions:

American Psychological

Likely refers to the American Psychological Association (APA), the leading scientific and professional organization representing psychology in the United States.

Wilhelm Wundt

Often regarded as the father of experimental psychology, he established the first psychology laboratory in Leipzig, Germany.

Structuralism

A theory in psychology focusing on the elements of consciousness and their logical relationships, aimed at understanding the structure of the mind.

Functionalism

A theory in psychology that emphasizes the purpose and practical consequences of mental processes and behaviors.