Excerpts from Raimo Corporation\'s comparative balance sheet appear below: endin

Question

Excerpts from Raimo Corporation's comparative balance sheet appear below: ending balance beginning balance Cash and cash equivalents $42,000 30,000 Inventory 411,000 389,000 accounts payable 83,000 79,000 Which of the following is the correct treatment within the operating activities section of the statement of cash flows using the indirect method? The change in Inventory is added to net income; The change in Accounts Payable is subtracted from net income The change in Inventory is added to net income; The change in Accounts Payable is added to net income The change in Inventory is subtracted from net income; The change in Accounts Payable is added to net income The change in Inventory is subtracted from net income; The change in Accounts Payable is subtracted from net income

Explanation / Answer

Given Info: Cash 42,000 30,000 12000 decrease Inventory 4,11,000 3,89,000 - 22000 decrease- added to Net Income A/c payable 83000 79000 - 4000 decrease – subtracted from Net Income Option 1 is the right answer : Change in Inventory added to Net Income and change in A/c Payable subtracted from Net Income

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