Using the Indirect Method to Calculate Net Cash Provided by Operating

question 36

Multiple Choice

Using the indirect method to calculate net cash provided by operating activities,a decrease in prepaid expenses is:

• A)subtracted from net income.
• B)added to net income.
• C)ignored since it does not affect expenses.
• D)ignored since it does not affect net income.

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Definitions:

Lesser Omentum

A double layer of peritoneum that extends from the liver to the lesser curvature of the stomach and the beginning of the duodenum.

Greater Omentum

A large apron-like fold of visceral peritoneum that hangs down from the stomach.

Stomach

A muscular, hollow organ in the gastrointestinal tract that plays a major role in digestion by breaking down food with acid and enzymes.

Liver

A vital organ that performs essential functions such as detoxification, protein synthesis, and the production of biochemicals necessary for digestion.