The Comparative Balance Sheets of Apollo Rocket,Inc

question 163

Multiple Choice

The comparative balance sheets of Apollo Rocket,Inc.show a net increase in inventory of $79,000 and a net decrease in accounts payable of $42,000 during 2018.In computing net cash flow from operating activities under the indirect method,net income for 2018 should be:

• A)Increased by $37,000.
• B)Reduced by $37,000.
• C)Increased by $121,000.
• D)Reduced by $121,000.

---

Definitions:

Lower-Of-Cost-Or-Market

An accounting principle that values inventory at the lesser of its historical cost or the market replacement cost, ensuring inventory is not overstated.

Inventory Valuation

The method used to calculate the cost associated with an inventory, which can impact the cost of goods sold and net income.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue, indicating the company's actual financial performance over a specific period.

Rapidly Rising Costs

A situation where the expenses associated with producing goods or services increase at a faster pace than usual, affecting profitability.