Match the Letter with the Correct Item Below to Indicate

question 16

Essay

Match the letter with the correct item below to indicate how each revenue or expense account on the income statement is adjusted when using the direct method to determine net cash flow from operating activities.
A - Add item to revenue or expense
S - Subtract item from revenue or expense
N - No adjustment necessary
_______ increase in accrued expenses
_______ decrease in accounts receivable
_______ decrease in unearned income
_______ increase in prepaid expenses
_______ decrease in accounts payable
_______ increase in long-term notes payable
_______ decrease in prepaid insurance
_______ increase in inventory
_______ increase in interest payable
_______ increase in accumulated depreciation

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Definitions:

Parent Interest

Refers to the portion of equity in a subsidiary attributable directly to the parent company, excluding any minority or non-controlling interests.

Fair Value

The price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Active Market

A market in which assets or securities are frequently traded, providing reliable price information and liquidity.