Assuming the Use of the Indirect Method to Prepare the Statement

question 1

Essay

Assuming the use of the indirect method to prepare the statement of cash flows, indicate whether each of the following items would be added to net income, subtracted from net income or not included in the operating activity section. Use the letters "A" for added; "S" for subtracted or "N" for not included in operating activity section. $$\begin{array} { | l | l | l | } \hline & & \text { Answers } \\\hline \text { a. } & \text { Increase in Treasury Stock } & \\\hline \text { b. } & \text { Decrease in Interest Payable } & \\\hline \text { c. } & \text { Increase in Unearned Revenue } & \\\hline \text { d. } & \text { Increase in Bonds Payable } & \\\hline \text { e. } & \text { Decrease in Treasury Stock } & \\\hline \text { f. } & \text { Increase in Inventory } & \\\hline \text { g. } & \begin{array} { l } \text { Decrease in Marketable Securities (Available for } \\\text { sale securities) }\end{array} & \\\hline \text { h. } & \text { Gain on Sale of Land } & \\\hline \text { i. } & \text { Increase in Buildings } & \\\hline \text { j. } & \text { Decrease in Supplies } & \\\hline\end{array}$$

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Definitions:

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time.

Spreadsheet

A digital tool allowing users to organize, analyze, and store data in tabular form, often used for financial calculation and management.

Job-Order Costing

An accounting method used to track the costs associated with producing specific jobs or batches, assigning material, labor, and overhead costs to each job separately.

Cost of Goods Sold

The direct costs attributed to the production of the goods sold by a company, including direct labor and materials, but excluding indirect expenses.