3. Net income was incorrectly understated by $6,000 on the year-end income statement. How will the statement of cash flows reflect

3. Net income was incorrectly understated by $6,000 on the year-end income statement. How will the statement of cash flows reflect

3. Net income was incorrectly understated by $6,000 on the year-end income statement.How will the statement of cash flows reflect correction of this error? Select one.A. Decrease of $6,000 in operating activitiesB. Increase of $6,000 in operating activitiesC. Increase of $6,000 in investing activitiesD. Decrease of $6,000 in investing activities4. A company shows common size comparisons for two years on balance sheets. There is almost a two-foldincrease in cash and equivalents, a 3% decrease in inventories, a small decrease in net property andequipment, and a large increase in retained earnings.What does this data indicate about the company? Select one.A. Its financial strength has deteriorated.B. Its financial strength has improved.C. It is failing to maintain its financial strength and should have serious concerns about its net income.D. It is a stable company but it should be concerned about the performance of its assets in relation toincome.5.Given Data: This year Last yearIncome Taxes Payable $22,000 $25,000Accounts Payable $32,000 $28,000Accounts Receivable $55,000 $60,000The statement of cash flows has been prepared using the indirect method.What is the effect on net cash provided by operating activities for the year?Select one.A. $8,000 increaseB. $6,000 increaseC. $6,000 decreaseD. $8,000 decrease


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