In a Statement of Cash Flows Prepared by the Indirect

question 32

Multiple Choice

In a statement of cash flows prepared by the indirect method, which of the following events would be deducted from net income?

• A)equity-method investment income in excess of dividends received
• B)loss on the sale of an available-for-sale investment
• C)proceeds from the sale of plant assets
• D)amortization expense on a patent

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in a public market.

Cash Dividend

A payment made by a company out of its profits to its shareholders in cash, typically on a regular basis.

Treasury Stock

Shares that were once part of the outstanding shares and have been bought back by the issuing company, reducing the amount of stock on the open market.

Common Stock

Equity shares that represent a form of corporate ownership, entitling the shareholder to a share of the company's success through dividends and or capital appreciation.