Texas Corp The Change in Accounts Payable Is Reported as a Negative

question 165

True/False

Texas Corp.uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet:
$\begin{array}{c}\text { Texas Corp.}\\\text { Comparative Balance Sheet}\\\text { December 31,2018 and 2017}\\\begin{array}{|l|r|r|r|}\hline&2018&2017&\text { Increase/(Decrease) }\\\hline \text { Accounts Payable } & \$ 8,000 & \$ 9,000 & \$(1,000 \\\hline \text { Accrued Liabilities } & 3,000 & 1,500 & 1,500 \\\hline \text { Long-term Notes Payable } & \underline{56,000} & \underline{60,000} & \underline{(4,000} \\\hline \text { Total Liabilities } & \$ 67,000 & \$ 70,500 & \$(3,500) \\\hline\end{array}\end{array}$
The change in Accounts Payable is reported as a negative cash flow in the adjustments to net income.

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Definitions:

Shed

A small building, typically made of wood or metal, used for storage or as a workshop, commonly found in gardens or backyards.

Sub-Bailment

A situation where a bailee (person who receives property) further entrusts the bailed property to another person, under a sub-bailment contract.

Original Bailor

The person who initially entrusts their property to another (the bailee) under an agreement for the property's temporary care or possession.

Gratuitous Bailment

An arrangement where personal property is temporarily transferred from one party to another without the expectation of payment, based on trust.