When Using the Indirect Method to Calculate and Report the Net

question 168

Multiple Choice

When using the indirect method to calculate and report the net cash provided or used by operating activities,net income is adjusted for all but which of the following?

• A)Gains and losses from nonoperating items.
• B)Revenues and expenses that did not provide or use cash.
• C)Changes in noncurrent assets and noncurrent liabilities.
• D)Changes in current liabilities related to operating activities.
• E)Depreciation and amortization expense.

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Definitions:

Marginal Productivity Theory

An economic theory that explains the determination of wages in the labor market, suggesting that the wage of a worker is set at a level equal to their marginal contribution to the production process.

Income Disparities

The differences in income levels among individuals, households, or regions, indicating inequality in the distribution of wealth.

Compensating Differentials

Wage differentials that compensate workers for the job attributes, such as difficulty level or undesirable conditions, indicating the premium required to attract workers to these positions.

Marginal Productivity Theory

A principle that describes how the addition of a unit of labor or capital increases output, holding other factors constant.