Arch Associates Reports the Following Comparative Balance Sheets and Income

question 34

Multiple Choice

Arch Associates reports the following comparative balance sheets and income statement information.Which of the following cash flows would be included under the operating activities section of the cash flow statement? (Assume the direct method is used.) $$\begin{array}{l}\begin{array} {| l | l | l | } \hline &12/31/2013&12/31/2014\\\hline \text {Cash }&\$ 12,000&\$ 22,000\\\hline \text {Accounts receivable}&4,000&8,000 \\\hline \text {Prepaid insurance }&10,000&8,000 \\\hline \text {Inventory }&6,000& 2,000\\\hline \text {Property, plant and equipment }&12,000&10,000\\\hline \text {Total assets }&\$ 44,000&\$ 50,000\\\hline \text { }&\\\hline \text { Accounts payable } &\$ 8,000& \$ 12,000\\\hline \text { Salaries payable } &10,000&4,000\\\hline \text { Long term notes payable } & 8,000&6,000 \\\hline \text { Stockholders' equity }& 18,000 &28,000 \\\hline \text { Total liabilities and equity } &\$ 44,000&\$ 50,000\\\hline\end{array}\end{array}$$ NEED TO MAKE CHANGES TO TABLE Change 12/31/13 to:
12/31/Year 1
Change 12/31/14 to:
12/31/Year 2
$$\begin{array} { | l | r | } \hline { \text { Income Statement } } \\\hline { \text { Year Ended 12/31/14 } } \\\hline \text { Revenue } & \$ 70,000\\\hline \text { Cost of goods sold } & 40,000 \\\hline \text { Gross margin } & 30,000\\\hline \text { Operating expense } & 20,000 \\\hline \text { Net income } &\$ 10,000 \\\hline\end{array}$$ NEED TO MAKE CHANGES TO TABLE
Change 12/31/14 to:
12/31/Year 2

• A)Cash received from issuing bonds payable.
• B)Cash paid to purchase equipment.
• C)Cash receipts from dividends.
• D)None of these.
• NEED TO MAKE CHANGES TO TABLE
• Change 12/31/13 to:
• 12/31/Year 1
• Change 12/31/14 to:
• 12/31/Year 2
• NEED TO MAKE CHANGES TO TABLE
• Change 12/31/14 to:
• 12/31/Year 2

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Definitions:

Constitutional Union Party

A political party in the United States formed in 1860, which sought to avoid secession by focusing on the Constitution and the Union without addressing the contentious issue of slavery.

Upper South

A subregion of the southeastern United States, typically considered to include states like Virginia, North Carolina, and Tennessee, known for their distinct historical, economic, and cultural characteristics compared to the Deep South.

John Bell

A Tennessee politician who was the Constitutional Union Party candidate for president in 1860, known for his moderate stance on the issue of slavery.

Elkhorn Tavern

A historically significant building located within Pea Ridge National Military Park in Arkansas, known for its role during the Civil War.