On a Statement of Cash Flows Prepared Using the Indirect

question 128

Multiple Choice

On a statement of cash flows prepared using the indirect method,an increase in accounts payable during the period is:

• A)added to net income to determine net cash provided by operating activities.
• B)deducted from net income to determine net cash provided by operating activities.
• C)shown as a cash inflow in the investing activities section.
• D)shown as a cash inflow in the financing activities section.

---

Definitions:

Interest Rates

The cost incurred by a borrower, represented as a proportion of the principal, for accessing a lender's assets.

Yield Curve

A line that plots the interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates.

Liquidity Premiums

Additional yield that investors demand for holding securities that are not easily sold at their fair market value without a significant price concession.

Callable Bonds

Bonds that can be redeemed by the issuer prior to their maturity date at a predetermined call price.