Reliance Corporation Has Provided the Following Information for the Year

question 59

Multiple Choice

Reliance Corporation has provided the following information for the year ended December 31, 2016: • The equipment account balance increased $200,000.
• The equipment accumulated depreciation account balance increased $35,000.
• Equipment costing $50,000 was sold during the year resulting in a $10,000 gain.
• Depreciation expense recorded on the equipment during the year was $65,000.
Which of the following statements is correct with respect to determining cash flow from operating activities?

• A)Using the indirect method, net income is increased by the $35,000 increase in the accumulated depreciation account balance.
• B)Using the indirect method, net income is decreased by the $30,000 sales price of the equipment.
• C)Using the indirect method, net income is increased by the $65,000 depreciation expense.
• D)Using the indirect method, net income is increased by the $10,000 gain on the sale of the equipment.

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Definitions:

Current Time Horizons

The present period during which an organization or individual focuses their planning and decision-making efforts.

Future Time Horizons

A planning period in the future for which predictions or plans are made, often used in strategic planning.

Firm-Specific Human Capital

The competencies, knowledge, skills, and abilities that employees possess based on their tacit knowledge, and learned from experience and through mentorship in the organization.

Competitive Advantage

A state or feature that enhances a company's business standing, making it more successful than its competitors.