Washington Corp If Washington Uses the Indirect Method to Prepare the Operating

question 26

Multiple Choice

Washington Corp.reported the following information for 2017 and 2018: $$\begin{array} { l r r } \text { Accounts receivable } & \underline { \mathbf { 2 0 1 7 } } & \underline { \mathbf { 2 0 1 8 } } \\\text { Prepaid expenses } & \$ 101,000 & \$ 93,000 \\\text { Accounts payable } & 5,000 & 6,000 \\\text { Salaries payable } & 71,000 & 76,000 \\\text { Net income } & 5,000 & 4,000 \\\text { Depreciation expense } & & 80,000 \\\text { Gain on sale of equipment } & & 9,000 \\& & 5,000\end{array}$$ If Washington uses the indirect method to prepare the Operating Activities section of the statement of cash flows,what amount will be reported as net cash inflow from operating activities for 2018?

• A)$73,000
• B)$83,000
• C)$95,000
• D)$105,000

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Definitions:

Tax Bracket

Categories that tax rates apply to, which are based on levels of income; each bracket has a different tax rate associated with it.

Equivalent Taxable Yield

The yield on a tax-exempt security that would be required to produce the same after-tax yield as a taxable security, given an investor's tax rate.

State Bond

Debt securities issued by a state government to finance its expenditures, offering a way for investors to lend money to the government in exchange for interest payments.

Buy-And-Hold

An investment strategy where securities are purchased and held for a long period to mitigate the effects of market volatility.