Question #1 (2 points ) For the following activities, indicate the adjustment to
ID: 2468578 • Letter: Q
Question
Question #1 (2 points) For the following activities, indicate the adjustment to be made, if any, to net income in the operating section of the cash flow statement prepared on the indirect method:
(A) Increase net income (B) Decrease net income
(C) No adjustment (investing activity). (D) No adjustment (financing activity)
_____1. Accounts receivable decreased by $5,000 from last year to this year.
_____2. Depreciation was $30,000.
_____3. Prepaid Expenses decreased $10,000.
_____4. Accounts Payable increased $20,000.
_____5. Merchandise inventory decreased by $15,000.
_____6. Office furniture increased $8,000.
_____7. Sold a building at a gain of $5,000.
_____8. Issued a cash dividend.
_____9. Amortization of intangible assets was $10,000.
_____10. Purchased 100 shares of Google common stock for $15,000.
Explanation / Answer
Particulars Answer 1. Accounts receivable decreased by $5,000 from last year to this year. B 2. Depreciation was $30,000. A 3. Prepaid Expenses decreased $10,000. B 4. Accounts Payable increased $20,000. B 5. Merchandise inventory decreased by $15,000. B 6. Office furniture increased $8,000. C 7. Sold a building at a gain of $5,000. C 8. Issued a cash dividend. D 9. Amortization of intangible assets was $10,000. A 10. Purchased 100 shares of Google common stock for $15,000. D