In Determining Net Cash Flow from Operating Activities, an Increase

question 13

Multiple Choice

In determining net cash flow from operating activities, an increase in merchandise inventory during a period ________.

• A) requires a subtraction adjustment to financing cash flows under the indirect method
• B) requires a subtraction adjustment to sales to customers under the direct method
• C) requires an addition adjustment to net income under the indirect method
• D) requires an addition adjustment to payments for merchandise under the direct method

---

Definitions:

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Futures Markets

Exchanges that facilitate the buying and selling of futures contracts, which are agreements to buy or sell assets at a future date at a predetermined price.

Leverage

The use of borrowed money to increase the potential return of an investment, which can also magnify the potential loss.

Margin

The difference between the selling price of a product or service and its cost, or the borrowed funds used to invest in securities.