Which of the Following Statements Regarding Calculation of Cash Flows

question 48

Multiple Choice

Which of the following statements regarding calculation of cash flows from operating activities under the indirect method is true?

• A)When the indirect method is used,changes in current liabilities are subtracted while changes in current assets are added to convert net income to net cash flow from operating activities.
• B)When the indirect method is used,depreciation expense is added to net income as a step in the process of calculating net cash flow from operating activities.
• C)When the indirect method is used,gains on the sale of property,plant and equipment are added to convert net income to net cash flow from operating activities.
• D)When the indirect method is used,changes in long-term liabilities are subtracted to convert net income to net cash flow from operating activities.

Analyze the effectiveness of compound and complex sentences in enhancing readability.

Comprehend the role of sentence structure in the clarity and coherence of paragraphs.

Distinguish between different methods of connecting ideas within and across sentences.

Appreciate the stylistic aspects of writing that contribute to author voice.

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Definitions:

Proprietary Fund

A type of governmental accounting fund used to account for activities that are similar to those found in the private sector, where the intent is to recover costs through user charges.

Financial Statement

Documented records summarizing a business's financial condition and operations over a period.

Statement of Net Position

A financial statement detailing an entity's assets, liabilities, and net position at a particular point in time, providing a snapshot of financial health.