QUESTION 6 At the beginning of January, 2014, Wise Company had a balance in its

Question

QUESTION 6 At the beginning of January, 2014, Wise Company had a balance in its Retained Earnings account totaling $42,000. At the end of the year, the balance totaled $47,000. If $11,000 of dividends were declared and paid during the year, how much was net income during 2014? O a. $53,000 b$5,000 O c $6,000 od. $16,000 QUESTION 7 In calculating net cash provided by operating activitice using the indirect method, why is there an adjustment to net income for the amount of depreciation expense Oa Depreciation is a cash amount that will not be paid during the current year O b. Depreciation is not a cash amount and was deducted to determine net income, so it must be added back to determine the net cash flows. OC Depreciation is a cash expense that was deducted to determine net income, soit must be added back to determine the net cash flows O d. Depreciation is a cash outflow that reduces the amount of income.

Explanation / Answer

6.

Net Income during 2014 = Ending balance in Retained earnings account + Dividends declared and paid during the year - Beginning balance in Retained earnings account

= 47,000 + 11,000 - 42,000

= 16,000.

--------------------------------------------------------------------------------------------------------

17.

Depreciation is a non cash expenditure. As there is no cash outflow, it must be added back to determine the net cash flow.

The answer is B.

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.