Krech Corporation's Comparative Balance Sheet Appears Below

question 61

Multiple Choice

Krech Corporation's comparative balance sheet appears below:
The company's net income (loss) for the year was ($3,000) and its cash dividends were $3,000. It did not sell or retire any property, plant, and equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities.
-Which of the following is correct regarding the operating activities section of the statement of cash flows?

• A) The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be subtracted from net income
• B) The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be subtracted from net income
• C) The change in Prepaid Expenses will be subtracted from net income; The change in Income Taxes Payable will be added to net income
• D) The change in Prepaid Expenses will be added to net income; The change in Income Taxes Payable will be added to net income

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Definitions:

Quantity Blocks

Predefined quantities of goods or services, often used in pricing or packaging.

Third-degree Price Discrimination

A pricing strategy where different prices are charged to different groups of customers based on their willingness to pay.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to changes in its price, indicating the sensitivity of consumers to price changes.

Increasing Block Rate

A pricing structure where the unit price of a service or commodity increases with the amount consumed, commonly used in utility and service pricing to encourage conservation.