Utah CorpUses the Indirect Method to Prepare the Statement of Cash

question 93

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: $\begin{array}{c}\text { Utah Corp.}\\ \text { Comparative Balance Sheet}\\\text { December 31,2018 and 2017}\\\begin{array}{|l|r|r|r|}\hline&2018&2017&\text { Increase/(Decrease) }\\\hline\text { Cash } & \$ 45,000 & \$ 27,000 & \$ 18,000 \\\hline \text { Accounts Receivable } & 48,000 & 45,000 & 3,000 \\\hline \text { Merchandise Inventory } & \underline{180,000} & \underline{132,000} & \underline{48,000} \\\hline \text { Total Assets } & \$ 273,000 & \$ 204,000 & \$ 69,000\\\hline\end{array}\end{array}$
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

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Definitions:

Size Constancy

A perceptual phenomenon where the perceived size of an object remains the same, despite changes in the size of the object's image on the retina.

Object Constancy

Correctly perceiving objects as staying the same in their size, shape, color, and lightness, across viewing conditions that yield different physical input to the eyes.

Wavelengths

The spacing between consecutive peaks of a wave, particularly in sound waves or electromagnetic waves.

Flipbook

A book with a series of pictures that vary gradually from one page to the next, so that when the pages are turned rapidly, the pictures appear to animate by simulating motion or some other change.