The Following Items Were Reported on the Balance Sheets and Income

question 72

Multiple Choice

The following items were reported on the balance sheets and income statement for Hawkeye Corporation: How would the change in accounts payable be reported in the operating activities section of Hawkeye's statement of cash flows under the indirect method?

• A) As an addition to operating expenses
• B) As a deduction from operating expenses
• C) As an addition to net income
• D) As a deduction from net income

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Definitions:

Economics

A branch of social science that examines the methods by which people, governmental bodies, corporations, and states allocate finite resources to meet their infinite needs.

Opportunity Cost

The cost of foregone alternatives when a decision is made, essentially what is given up to undertake a certain action.

Alternative Use

speaks to the different ways an asset or resource can be utilized outside its current application, highlighting its opportunity cost.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing to invest resources in one option over another.