Assume a Company Uses the Indirect Method to Prepare Its

question 141

Multiple Choice

Assume a company uses the indirect method to prepare its statement of cash flows.If the Supplies account decreases and Salaries and Wages Payable increases during an accounting period,what does the company do with the changes in these accounts to calculate cash flows from operating activities?

• A)Both are subtracted from net income.
• B)The change in Salaries and Wages Payable is added to net income;the change in Supplies is subtracted from net income
• C)Both are added to net income.
• D)The change in Supplies is added to net income;the change in Salaries and Wages Payable is subtracted from net income.

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Definitions:

Psychological Contract

The unspoken, informal agreement that exists between an employee and their employer regarding expectations of performance and benefits.

Mutual Obligation

A reciprocal relationship in which parties agree to provide something to each other, enforcing a sense of responsibility and duty.

Knowledge Work

Intellectual tasks that generate, process, or disseminate information, typically involving analytical thinking or problem-solving.

Personally Unfulfilling

Describes an experience or task that does not provide personal satisfaction or fulfillment.