When Using the Spreadsheet Approach for the Indirect Method to Calculate

question 36

Multiple Choice

When using the spreadsheet approach for the indirect method to calculate cash flows from operating activities,net income would be found as:

• A)a debit to the Retained Earnings account.
• B)the difference between revenues and expenses.
• C)a credit to the Retained Earnings account.
• D)the difference between gains and losses.

Recognize the advantages and disadvantages of partnership compared to incorporation.

Identify the regulatory requirements for sole proprietorships and partnerships.

Understand the concept and extent of fiduciary duty between an agent and a principal.

Grasp the implications of the Partnership Act on joint business activities.

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Definitions:

Residual Dividend

A policy whereby dividends are based on earnings after all projects with positive NPV are funded.

Capital Budgeting Projects

Long-term investment decisions made by companies to invest in projects or assets with the aim of generating revenue or reducing costs in the future.

Dividend Distribution

Dividend distribution refers to the payment a company makes to its shareholders out of its profits or reserves, usually in the form of cash or additional shares.

Target Capital Structure

The optimal mix of debt, equity, and other financing sources a firm aims to achieve to minimize its cost of capital.