When Using the Indirect Method of Preparing the Statement of Cash

question 96

Multiple Choice

When using the indirect method of preparing the statement of cash flows, an increase in accounts payable should be treated as ________.

• A) a cash outflow
• B) inflow and outflow of cash
• C) an addition to net income
• D) a deduction from net income

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Definitions:

Processing Department

A specific section or area within a manufacturing facility where a particular type of processing or operation is carried out on products.

Processing Department

A unit within a manufacturing facility where a specific type of production activity takes place.

Journal Entry

A record of the financial transactions entered into the accounting ledger of a business.

Production Process

The series of steps or actions taken to convert raw materials into finished goods or services.