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

question 112

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 payable appear on a consolidated statement of cash flows?

• A)$7,000 increase to net income as an operating activity.
• B)$7,000 decrease to net income as an operating activity.
• C)$5,600 increase to net income as an operating activity.
• D)$5,600 decrease to net income as an operating activity.
• E)$7,000 increase as a financing activity.

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