Exhibit 12-4
Manning Company Uses the Indirect Method to Prepare

question 63

Multiple Choice

Exhibit 12-4
Manning Company uses the indirect method to prepare the statement of cash flows.The following amounts are shown in its December 31,2017,financial statements.
$$\begin{array} { l c c } & \text { December 31, } 2017 & \text { December 31, 2016 } \\ \text { Accourts receivable } & \$ 663,000 & \$ 600,000 \\\text { Cost of goods sold } & \$ 1,800,000 & \\\text { Sales reveruse } & \$ 2,400,000 & \\\text { Accourts payable } & \$ 255,000 & \$ 195,000 \\\text { Irventory } & \$ 270,000 & \$ 375,000 \\\text { Salaries payable } & \$ 45,000 & \$ 30,000 \\\text { Salaries expense } & \$ 165,000 & \$ 144,000\end{array}$$
-Refer to Exhibit 12-4.How will the change in accounts payable be reported in the operating activities section of the statement of cash flows?

• A)The increase of $60,000 will be subtracted from sales revenue.
• B)The increase of $60,000 will be added to net income.
• C)The increase of $60,000 will be added to sales revenue.
• D)The increase of $60,000 will be subtracted from net income.
• E)None of the answer choices is correct.

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Definitions:

Crisis Leadership

The capability of leading and managing an organization before, during, and after a crisis in a way that minimizes damage and enables it to recover quickly.

Disaster Planning

The process of creating procedures and measures to prepare, respond to, and recover from emergency situations or natural calamities.

Transactional Leader

A leadership style focused on the exchange process between leader and followers, where performance is rewarded and not meeting standards is punished.

Path-Goal Theory

A leadership theory that emphasizes the leader's role in clarifying paths to goals and removing obstacles to performance.