Using the Indirect Method to Calculate the Net Cash Provided

question 132

Multiple Choice

Using the indirect method to calculate the net cash provided (or used) by operating activities,profit is adjusted for

• A)Gains and losses from investing and financing activities
• B)Revenues and expenses that did not provide or use cash
• C)Changes in noncash current assets and current liabilities related to operating activities
• D)Gains and losses from investing and financing activities and revenues and expenses that did not provide or use cash
• E)All of these

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Definitions:

Budgeted Production

The quantity of units that a company plans to produce in a specific period, based on forecasted sales and desired inventory levels.

Finished Goods Inventory

The stock of completed products that have not yet been sold to customers.

Required Production

The amount of production a company needs to meet its sales goals and inventory policies, often calculated based on forecasted sales plus target ending inventory minus beginning inventory.

Manufacturing Corporation

A manufacturing corporation is a company engaged in the industrial production of goods and products.