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:

EPA Fine

A penalty imposed by the Environmental Protection Agency for violations of environmental laws or regulations.

Litigation

The process of taking legal action or resolving disputes in court.

Fixed Asset

Long-term tangible assets held for business use and not expected to be converted to cash in the upcoming business cycle.

Damage Repair

The process of fixing or restoring property or items that have been harmed or degraded.