At the Beginning of 2015,Baldwin Corporation Bought an Automobile for $36,000

question 83

Multiple Choice

At the beginning of 2015,Baldwin Corporation bought an automobile for $36,000 by issuing a note payable.The automobile has a six-year life and is depreciated using the straight-line method.To determine net cash flow from operating activities for 2015 using the indirect method,net income should be:

• A)Increased by $6,000.
• B)Decreased by $6,000.
• C)Increased by $42,000.
• D)Neither increased nor decreased.No adjustments are necessary since no cash was received or paiD.$36,000/6 = $6,000

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Definitions:

Weighted-Average Method

An inventory costing method that calculates the cost of ending inventory and cost of goods sold based on the average cost of all goods available for sale during the period.

Conversion Costs

Combined costs of direct labor and manufacturing overhead, representing the costs to convert raw materials into finished goods.

Weighted-Average Method

An inventory costing method that takes the average cost of all goods available for sale during the period, weighted by the quantities purchased at different times.

Cost Reconciliation Report

A document that compares and explains the differences between expected costs and actual costs.