At the End of the First Year of Operations, the Balance

question 86

Multiple Choice

At the end of the first year of operations, the balance sheet of West Palm Beach Industries had the following balances: Accounts Receivable, $5,000; Accounts Payable, $6,000; Inventory, $3,000; and Unexpired Insurance, $2,000.The corporation reported net income of $79,000 for the year, including depreciation expense of $5,000, and uses the indirect method of computing net cash flow from operating activities.Based on this information, net cash flow from operating activities is:

• A)$82,000
• B)$78,000
• C)$80,000
• D)$77,000

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Definitions:

Dishonored Note

A promissory note that has not been paid by the maker at the maturity date.

360-Day Year

An accounting convention that simplifies interest calculations by assuming each month has 30 days, totaling 360 days for the year.

Interest Calculation

The process of determining the charge for the use of borrowed funds or the return on invested funds, typically expressed as an annual percentage rate.

Accrued Interest

Interest that has been incurred but not yet paid or received.