In Preparing a Company's Statement of Cash Flows for the Most

question 209

Multiple Choice

In preparing a company's statement of cash flows for the most recent year using the indirect method, the following information is available: $$\begin{array} { l | r } \text { Net income for the year was } & \$ 52,000 \\\hline \text { Accounts payable decreased by } & 18,000 \\\hline \text { Accounts receivable increased by } & 25,000 \\\hline \text { Inventories increased by } & 5,000 \\\hline \text { Depreciation expense was } & 30,000\end{array}$$ Net cash provided by operating activities was:

• A) $60,000.
• B) $34,000.
• C) $80,000.
• D) $52,000.
• E) $70,000.

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Definitions:

Money Supply

The total amount of monetary assets available in an economy at any specific time, including cash, bank deposits, and other liquid assets.

Deposit Expansion Multiplier

A ratio that explains the total increase in deposits within the banking system generated from an initial deposit, based on the reserve requirement ratio.

Open Market Securities

Financial instruments such as bonds or stocks that are traded freely on the open market and can be bought and sold by investors.

Fed

Short for the Federal Reserve, which is the central banking system of the United States, responsible for monetary policy.