Taylor Chemicals Company uses the indirect method to prepare its statement of cash flows.Refer to the following portion of the comparative balance sheet:
- Note: Net Income for the year was $56,000.
Which of the following statements is true of Taylor's statement of cash flows for the year 2014?

Question

Taylor Chemicals Company uses the indirect method to prepare its statement of cash flows.Refer to the following portion of the comparative balance sheet: 
- Note: Net Income for the year was $56,000.
Which of the following statements is true of Taylor's statement of cash flows for the year 2014?

Quizplus · Accepted Answer

Since the net income for the year was $56,000 and there was an increase in retained earnings of $4,000, the cash dividends declared during the year must have been $52,000 ($56,000 - $4,000 = $52,000). The other options are not supported by the information given in the comparative balance sheet.

Taylor Chemicals Company Uses the Indirect Method to Prepare Its