In the Preparation of a Statement of Cash Flows, Adjustments

question 52

Multiple Choice

In the preparation of a statement of cash flows, adjustments to net income to reconcile net income to cash from operating activities include

• A) dividends received.
• B) the difference between the purchase price and the resale price of treasury stock (assuming the cost method of accounting for treasury stock).
• C) amortization of organization cost.
• D) redemption premium on preferred stock redeemed during the period.

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Definitions:

Snob Effect

The phenomenon where the demand for a certain good increases as it becomes more exclusive or prestigious, independent of its price.

Elasticity

A measure of how much the quantity demanded or supplied of a good responds to a change in one of its determinants, such as price or income.

Marketing

The process of promoting, selling, and distributing a product or service, including market research and advertising.

Network Externality

A situation where the value of a product or service increases as the number of users expands.