Which of the Following Statements About Calculation of Cash Flows

question 177

Multiple Choice

Which of the following statements about calculation of cash flows from operating activities under the indirect method is correct?

• A)When the indirect method is used,changes in current liabilities are subtracted while changes in current assets are added to convert net income to net cash flow from operating activities.
• B)When the indirect method is used,depreciation expense is added to net income as a step in the process of calculating net cash flow provided by operating activities.
• C)When the indirect method is used,changes in long-term assets are added to convert net income to net cash flow provided by operating activities.
• D)When the indirect method is used,changes in long-term liabilities are subtracted to convert net income to net cash flow provided by operating activities.

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Definitions:

Social Cognition Perspective

An approach that focuses on how people process, store, and apply information about other people and social situations.

Causal Attribution

The process by which individuals assign causes or reasons to events and behaviors, explaining why things happen.

Correlational Observation

A research approach that involves observing and measuring the relationship between two or more variables without manipulating them.

Third Variable Assumption

The idea in research that a correlation between two variables might be explained by a third factor that affects both of the original variables.