A company reports the following balances: What is reported on the statement of cash flows prepared with the indirect method for the year ended December 31,2016? Assume there were no retirements of common stock during 2016.No dividends were declared in 2016.
A)Financing Activity: Sale of Common Stock,$10,000
B)Financing Activity: Sale of Common Stock,$20,000
C)Operating Activity: Net Income $10,000
D)B and C

Question

A company reports the following balances:  What is reported on the statement of cash flows prepared with the indirect method for the year ended December 31,2016? Assume there were no retirements of common stock during 2016.No dividends were declared in 2016.
A)Financing Activity: Sale of Common Stock,$10,000 
B)Financing Activity: Sale of Common Stock,$20,000 
C)Operating Activity: Net Income $10,000 
D)B and C

Quizplus · Accepted Answer

The statement of cash flows prepared with the indirect method starts with net income (operating activity) and adjusts for non-cash expenses and changes in current assets and current liabilities to determine the cash flows from operating activities. Given that no retirements of common stock or dividends were declared, the only financing activity reported would be the sale of common stock. Therefore, the choices are either B or D. However, without any additional information, we cannot determine the exact amount of the sale of common stock. Therefore, the best choice is D, which includes options B and C.

A Company Reports the Following Balances: What Is Reported