Tennessee Moving Company Uses the Indirect Method to Prepare Its

question 151

True/False

Tennessee Moving Company uses the indirect method to prepare its statement of cash flows.Refer to the following portion of the comparative balance sheet:
$\begin{array}{c} \text {Tennessee Company}\\ \text {Comparative Balance Sheet}\\ \text {December 31,2018 and 2017}\\\begin{array}{|l|r|r|r}\hline&2018 & 2017 & \text { Increase/(Decrease) }\\\hline \text { Common Stock } & \$ 34,000 & \$ 10,000 & \$ 24,000 \\\hline \text { Retained Earnings } & 115,000 & 90,000 & 25,000 \\\hline \text { Treasury Stock } & \underline{13,000} & \underline{(8,000} & \underline{(5,000)} \\\hline \text { Total Stockholder's' Equity } & 136,000 & 92,000 & 44,000 \\\hline\end{array}\end{array}$ If the net income for the year was $67,000,the company must have declared $42,000 as dividends during the year.

---

Definitions:

Pie Chart

A graphical representation of data in the form of a circle with slices that proportionally represent different categories or parts of a whole.

Car Dealer

A business entity that sells new or used automobiles, often operating on a dealership contract with an automaker or its sales subsidiary.

Overall Service

A general term that could refer to the comprehensive quality and efficiency of service provided by a business or organization to its customers.

Pie Chart

A circular chart divided into sectors, each representing a proportion of the whole.