Question

1) What item would not be included in comprehensive income?

A) foreign currency translation adjustments

B) unrealized gains & losses

C) dividends to stockholders

D) all would be included in comprehensive income

2)Salaries payable decreased from 2009 to 2010. Using the indirect method (statement of cash flows), the decrease should be:

A) be subtracted from net income

B) be added to net income

C) have no adjustment made to net income

D) be added to the investing section of the statement of cash flows

3)Salaries payable increased from 2009 to 2010. Using the indirect method (statement of cash flows), the increase should be:

A) be subtracted from net income

B) be added to net income

C) have no adjustment made to net income

D) be added to the investing section of the statement of cash flows

Answer 1

• Answer 1

Correct Answer = Option ‘C’ Dividends to Stockholders is NOT INCLUDED in comprehensive income.

It is deducted under Statement of Retained earnings.

• Answer 2

Decrease in Current Liabilities are deducted under Operating activities section while preparing Statement of Cash Flows using Indirect Method.

Hence, correct Answer = Option ‘A’ be subtracted from Net Income.

• Answer 3

As discussed above in ‘2’ Decrease in Current Liabilities is DEDUCTED, the Increase in Current Liabilities will be ADDED under Operating activities section while preparing Statement of Cash flows using Indirect Method.

Hence, correct Answer = Option ‘B’ be Added to Net Income