The Following Items Were Reported on the Balance Sheets and Income

question 142

Multiple Choice

The following items were reported on the balance sheets and income statement for Infantini Corp.: How would the change in accounts payable be reported in the operating activities section of the statement of cash flows under the indirect method?

• A)As an addition to operating expenses.
• B)As a deduction from operating expenses.
• C)As an addition to net income.
• D)As a deduction from net income.

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Definitions:

Working Capital

The distinction between an organization's immediate assets and liabilities, showing its short-term fiscal well-being and effectiveness in operations.

Plant and Equipment

Long-term tangible assets used in the operation of a business, not intended for sale.

Noncurrent Assets

Long-term assets that are not expected to be converted into cash, sold, or consumed within one year or the operating cycle, including property, plant, and equipment.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest of shareholders.