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ABC Inc. reports a net income of $165,000. Included in net income is a gain on the sale of land of $20,000. A comparison of this year's and last year's balance sheets reveals an increase in accounts receivable of $35,000, an increase in inventory of $20,000, and a decrease in accounts payable of $55,000. Required: Prepare the operating activities section of the statement of cash flows using the indirect method. Then, answer the following questions:

ABC Inc. reports a net income of $165,000. Included in net income is a gain on the sale of land of $20,000. A comparison of this year's and last year's balance sheets reveals an increase in accounts receivable of $35,000, an increase in inventory of $20,000, and a decrease in accounts payable of $55,000. Required: Prepare the operating activities section of the statement of cash flows using the indirect method. Then, answer the following questions:

FINANCIAL ACCOUNTING
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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please answer the following 2 questions:


7. Any decrease in Liability should be ..

a) It depends on the circumstances

b) Dedected from Net Income

c) Added to Net Income

d) None of the above.

 

8. The increase in Accounts Receivable should be deducted from the net income.

a) True

b) False

ABC Inc. reports a net income of $165,000. Included in net income is a gain on the sale of land of $20,000. A comparison of this year's and last year's balance sheets reveals an increase in accounts receivable of $35,000, an increase in inventory of $20,000, and a decrease in accounts payable of $55,000. Required: Prepare the operating activities section of the statement of cash flows using the indirect method. Then, answer the following questions:
Transcribed Image Text:ABC Inc. reports a net income of $165,000. Included in net income is a gain on the sale of land of $20,000. A comparison of this year's and last year's balance sheets reveals an increase in accounts receivable of $35,000, an increase in inventory of $20,000, and a decrease in accounts payable of $55,000. Required: Prepare the operating activities section of the statement of cash flows using the indirect method. Then, answer the following questions:
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