REFERENCE: Ref.06_05 The Following Information Has Been Taken from the Consolidation Worksheet

question 20

Multiple Choice

REFERENCE: Ref.06_05
The following information has been taken from the consolidation worksheet of Graham Company and its 80% owned subsidiary,Stage Company.
(1. ) Graham reports a loss on sale of land of $5,000.The land cost Graham $20,000.
(2. ) Noncontrolling interest in Stage's net income was $30,000.
(3. ) Graham paid dividends of $15,000.
(4. ) Stage paid dividends of $10,000.
(5. ) Excess acquisition-date fair value over book value was expensed by $6,000.
(6. ) Consolidated accounts receivable decreased by $8,000.
(7. ) Consolidated accounts payable decreased by $7,000.
-Using the indirect method,where does the decrease in accounts receivable appear on a consolidated statement of cash flows?

• A)$8,000 increase to net income as an operating activity.
• B)$8,000 decrease to net income as an operating activity.
• C)$6,400 increase to net income as an operating activity.
• D)$6,400 decrease to net income as an operating activity.
• E)$8,000 increase as an investing activity.

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Definitions:

Revenue

The total financial proceeds accumulated from a company's chief business endeavors, including sales of services and goods integral to its operations.

Equity

The ownership interest of shareholders in a corporation, represented by the assets minus the liabilities.

Accounts Receivable

The amount due to a company from its clients for goods or services that have been dispatched or consumed, but payment has not been received.