Salem,IncUses the Indirect Method to Prepare Its Statement of Cash

question 5

Multiple Choice

Salem,Inc.uses the indirect method to prepare its statement of cash flows.Salem's Accumulated Depreciation-Trucks account increased during the period.Salem did not purchase or sell trucks during the period.The increase in Accumulated Depreciation-Trucks is:

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

---

Definitions:

Minimize Losses

The strategy or process of reducing the amount of losses incurred by a business, investment, or action as much as possible.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, remaining constant regardless of business activity levels.

Self-actualization Needs

According to Maslow's hierarchy, the highest level of psychological development where an individual reaches their full potential.

Psychological Development

The growth and change in an individual's cognitive, emotional, and social capabilities and behaviors throughout their life.