The Following Information Was Taken from the Operating Activity Section

question 29

Multiple Choice

The following information was taken from the operating activity section of the 2014 statement of cash flows for Limited Corp: Based on the information provided,which one of the following conclusions is correct?

• A)Accounts payable decreased $2,000 in 2014.
• B)Inventories increased $8,000 in 2014.
• C)The direct method was used to prepare the operating section of the cash flow statement.
• D)Cash payments of merchandise exceeded cost of goods sold by $2,000.

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Definitions:

C Corporation

A legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity.

Chart of Accounts

A systematic listing of all accounts used in the general ledger of an organization, categorized by assets, liabilities, equity, revenues, and expenses.

Tax Return Preparation

Tax return preparation involves compiling financial records, calculating income and expenses, and completing the necessary tax forms to comply with tax filing requirements.

Financial Information

Data regarding the monetary operations and condition of a business, such as revenue, expenses, assets, and liabilities.