Valentine Corp How Will the Change in Merchandise Inventory Be Shown on Cash

question 57

Multiple Choice

Valentine Corp.uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet: $\begin{array}{c}\text {Valentine Corp.}\\ \text {Comparative Balance Sheet}\\\text {December 31, 2017 and 2016}\\\begin{array}{|l|r|r|r|}\hline& 2017 & 2016 & \text { Increase/(Decrease) } \\ \hline \text { Cash } & \$ 45,000 & \$ 27,000 & \$ 18,000 \\\hline \text { Accounts Receivable } & 48,000 & 45,000 & 3,000 \\\hline \text { Merchandise Inventory } & \underline{180,00} & \underline{132,000} & \underline{48,000} \\\hline \text { Total Assets } & \$ 273,00 & \$ 204,000 & \$ 69,000 \\\hline\end{array}\end{array}$
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

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Definitions:

Fundamental Attribution Error

The tendency for observers, when analyzing another's behavior, to underestimate the impact of the situation and to overestimate the impact of personal character or intent.

Internal Factors

refers to influences originating within an individual, such as beliefs, attitudes, and personal motivations, affecting their behavior and actions.

Social Psychological Theories

Theories in social psychology that explain how individuals' thoughts, feelings, and behaviors are influenced by the actual, imagined, or implied presence of others.

Social Inequity

Refers to the unequal distribution of resources, opportunities, and treatment among people based on various demographic factors such as race, gender, income, etc.