A Company Uses the Direct Method to Prepare the Statement

question 9

Multiple Choice

A company uses the direct method to prepare the statement of cash flows.It presents the following amounts on its financial statements. $$\begin{array} { | l | r | r | } \hline & \text { End of this year } & \text { End of prior year } \\\hline \text { Accounts receivable } & \$ 110,000 & \$ 100,000 \\\hline \text { Cost of godds sald } & 560,000 & \\\hline \text { Sales revenue } & 830,000 & \\\hline \text { Accounts payable* } & 75,000 & 67,000 \\\hline \text { Inventary } & 86,000 &105,000 \\\hline \text { Salary payable } & 13,000 & 10,000\\\hline \text { Salary expense } & 49,000 & 45,000\\\hline\end{array}$$
*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 subtracted from net income.
• B)The increase of $3,000 will be subtracted from salary expense to determine payments to employees.
• C)The increase of $3,000 will be added to salary expense to determine payments to employees.
• D)The increase of $3,000 will be added to net income.

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Definitions:

Mother

A female parent or guardian who provides care, protection, and guidance to her offspring.

Defence Mechanisms

Psychological strategies brought into play by the unconscious mind to manipulate, deny, or distort reality in order to defend against feelings of anxiety or unacceptable thoughts and feelings.

Psychoanalytic Manoeuvre

A technique used in psychoanalysis to explore the unconscious motives behind one’s behaviors and thoughts.

Repression

A defense mechanism identified in psychoanalytic theory where unpleasant thoughts, memories, or desires are unconsciously pushed from conscious thought.