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:

Physical Structure

The tangible, physical layout of an organization's facilities, including its buildings and internal work spaces.

Cultural Values

The core principles and ideals upon which a society or community is founded, shaping beliefs, behaviors, and norms.

Office Space

The physical area designated for work-related activities, which can influence productivity, satisfaction, and organizational culture.

Organizational Culture

The shared values, beliefs, and practices that shape the social and psychological environment of an organization, influencing its members' behavior and attitudes.