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statement of cash flows,accounts payable,allowance for debts

53. Concerning the Indirect Statement of Cash Flows, select the correct statement.

A)The management of a company would mostly utilize the Indirect Statement of Cash Flows as a management tool since it starts with Net Income from the Income Statement.

B)The management of a company would not normally distribute the Indirect Statement of Cash Flows as a statement within its annual reports because it would most likely confuse the average reader.

C)The management of a company would most likely distribute the Indirect Statement of Cash Flows as a statement within its annual reports because it starts with Net Income and ends in the current cash balance which increases reader confidence in the report.

D)The management of a company would most likely distribute the Indirect Statement of Cash Flows as a statement within its annual reports because it does not present any relation to the other statements of the report, therefore it is least likely to confuse the reader.

54. If accounts payable have increased during a period _______.

A) revenues on an accrual basis are less than revenues on a cash basis

B) expenses on an accrual basis are less than expenses on a cash basis

C) expenses on an accrual basis are the same as expenses on a cash basis

D) expenses on an accrual basis are greater than expenses on a cash basis

55. An estimate based on an analysis of receivables shows that $780 of accounts receivables are uncollectible. The Allowance for Doubtful Accounts has a debit balance of $110. After preparing the adjusting entry at the end of the year, the balance in the Allowance for Doubtful Accounts is _______.
$110
$780
$670
$890

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ANSWER TO QUESTIONS

53.A)The management of a company would mostly utilize the Indirect Statement of ...

Solution Summary

The solution contains the purpose of preparation of cash flow statement by indirect method, impact of increase in accounts payable in case of accrual vs cash basis, calcualtion of balance of in allowance for doubtful debts account.

$2.19