How do Cramer’s accrued liabilities affect the company’s statement of cash flows for 2018?

a. They increase cash used by financing activities.

b. They increase cash provided by operating activities.

c. They increase cash used by investing activities.

d. They don’t because the accrued liabilities are not yet paid.

Cramer Corporation formats operating cash flows using the indirect method in this questions. Cramer uses the direct method in this question.

Transcribed Image Text:

A1 Cramer's Income Statement for 2018 $ 170,000 10,000* $ 110,000 7,500 27,000 2 Sales revenue 3 Gain on sale of equipment 4 Cost of goods sold 5 Depreciation 6 Other operating expenses 7 Net income $ 180,000 144,500 $ 35,500 *The book value of equlpment sold durlng 2018 was $22,000. A1 Cramer's Comparative Balance Sheets December 31, 2018 and 2017 1 2018 $ 3,500 6,000 8,000 89,000 $ 106,500 2017 $ 2,000 | Accounts payable $ 11,000 Accrued liabilities 7,000 Common stock 71,000 Retained earnings $ 91,000 2018 7,000 $ 8,000 9,000 20,000 70,500 $ 106,500 $ 91,000 2017 3 Cash 4 Accounts receivable 5 Inventory 6 Plant and equipment, net 1,000 10,000 72,000