ABC Corporation reported a net loss of $(115,000) for the year 2020. Over the course of that year, certain balance sheet accounts changed as follows: • Decrease in accounts receivable: $22,000 • Decrease in accounts payable: $18,600 • Increase in inventory: $14,800 • Increase in wages payable: $30,000 • Increase in common stock: $150,000 • Increase in net PP&E: $75,000 The depreciation expense was $46,000 for the year 2020. In addition, net income included a loss of $5,600 from selling used equipment. Indicate how each item should be reported in preparing Cash flows from operating activities using the indirect method. v Depreciation A. Add to net income v Loss from selling used equipment B. No effect C. Subtract from net income v Decrease in accounts receivable v Increase in inventory v Increase in wages payable v Decrease in accounts payable Increase in common stock

ABC Corporation reported a net loss of $(115,000) for the year 2020. Over the course of that year, certain balance sheet accounts changed as follows: • Decrease in accounts receivable: $22,000 • Decrease in accounts payable: $18,600 • Increase in inventory: $14,800 • Increase in wages payable: $30,000 • Increase in common stock: $150,000 • Increase in net PP&E: $75,000 The depreciation expense was $46,000 for the year 2020. In addition, net income included a loss of $5,600 from selling used equipment. Indicate how each item should be reported in preparing Cash flows from operating activities using the indirect method. v Depreciation A. Add to net income v Loss from selling used equipment B. No effect C. Subtract from net income v Decrease in accounts receivable v Increase in inventory v Increase in wages payable v Decrease in accounts payable Increase in common stock

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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