When Using the Indirect Method to Prepare the Operating Section

question 93

Multiple Choice

When using the indirect method to prepare the operating section of a statement of cash flows, which of the following is added to net income to compute cash flows from operating activities?

• A) gain on sale of long-term asset
• B) decrease in deferred tax liability
• C) bond discount amortization
• D) All of the above

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Definitions:

Pledge Form

A document or form that is filled out to indicate a commitment to donate a specified amount of money or resources, often used by charities and non-profit organizations.

Charity

An organization set up to provide help and raise money for those in need.

Reasonable Price

A price that is fair and suitable for the value or quality of goods or services provided, often considered in a legal context.

Gratuitous Promise

A promise for which no consideration is exchanged, often lacking legal enforceability unless certain criteria are met.