California Corp The Change in Accrued Liabilities Is Shown as a Negative

question 135

True/False

California Corp. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet:
$\begin{array}{c}\text { California Corp.}\\\text { Comparative Balance Sheet}\\\text { December 31,2018and 2017}\\\begin{array}{|l|r|r|r|}\hline& 2018 & 2017 & \text { Increase/(Decrease) } \\\hline\text { Accounts Payable } & \$ 8,000 & \$ 9,000 & \$(1,000 )\\\hline \text { Accrued Liabilities } & 3,000 & 1,500 & 1,500 \\\hline \text { Long-term Notes Payable } & 56,000 & \underline{60,000} & \underline{(4,000)} \\\hline \text { Total Liabilities } & \$ 67,000 & \$ 70,500 & \$(3,500) \\\hline\end{array}\end{array}$ The change in Accrued Liabilities is shown as a negative cash flow in the adjustments to net income.

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Definitions:

Market Structures

The organization and characteristics of a market, including the number and size of producers, product differentiation, and the ease of entry and exit, which affect competition and pricing strategies.

Close Substitutes

Products or services that can easily replace each other in the eyes of the consumer, due to their similar features and functionalities.

Diamond Mines

Sites or locations where diamonds are extracted from the earth.

Economic Profits

The gap between what a business earns in total and what it spends, factoring in both out-of-pocket and assumed costs.