Krech Corporation's comparative balance sheet appears below:
The company's net income (loss) for the year was ($3,000) and its cash dividends were $3,000. It did not sell or retire any property, plant, and equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities.
-Which of the following is correct regarding the operating activities section of the statement of cash flows?
A) The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be subtracted from net income
B) The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be added to net income
C) The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be subtracted from net income
D) The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be added to net income

Question

Krech Corporation's comparative balance sheet appears below:
  The company's net income (loss) for the year was ($3,000) and its cash dividends were $3,000. It did not sell or retire any property, plant, and equipment during the year. The company uses the indirect method to determine the net cash provided by operating activities.
-Which of the following is correct regarding the operating activities section of the statement of cash flows?
A) The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be subtracted from net income 
B) The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be added to net income 
C) The change in Accounts Payable will be subtracted from net income; The change in Accrued Liabilities will be subtracted from net income 
D) The change in Accounts Payable will be added to net income; The change in Accrued Liabilities will be added to net income

Quizplus · Accepted Answer

11ea7761_159b_8ccd_81a5_a97d1557ced8_TB2580_00 An increase in a current liability is added to net income. A decrease in a current liability is subtracted from net income.

Krech Corporation's Comparative Balance Sheet Appears Below