Utah Corp Uses the Indirect Method to Prepare the Statement of of Cash

question 149

Multiple Choice

Utah Corp. uses the indirect method to prepare the statement of cash flows. Refer to the following section of the comparative balance sheet: $\begin{array}{c}\text {Utah Corp.}\\\text {Comparative Balance Sheet}\\\text {December 31,2018 and 2017}\\\begin{array}{|l|c|c|c|}\hline & 2019 & 2018 & \text { Increase/(Decrease) } \\\hline \text { Cash } & \$ 45,000 & \$ 27,000 & \$ 18,000 \\\hline \text { Accounts Receivable } & 48,000 & 45,000 & 3,000 \\\hline \text { Merchandise Inventory } & \underline{180,000} & \underline{132,000} & \underline{48,000} \\\hline \text { Total Assets } & \$ 273,000 & \$ 204,000 & \$ 69,000 \\\hline\end{array}\end{array}$ How will the change in Merchandise Inventory be shown on the statement of cash flows?

• A) addition to net income under the operating activities section
• B) subtraction from net income under the operating activities section
• C) positive cash flow under the financing activities section
• D) negative cash flow under the investing activities section

---

Definitions:

Timer

An electronic component or software function that counts time intervals for the purpose of delaying actions or triggering events at specific moments.

Logic Rung

A single control element in a ladder diagram, representing a specific logic operation in a PLC program.

Processor

A Processor, or Central Processing Unit (CPU), is a primary component of a computer or electronic device responsible for executing instructions and managing tasks.

Data Stored

Refers to information that is placed and retained in a form of storage medium, digital or otherwise, for retrieval and use.