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When Preparing the Operating Activities Section of the Statement of Cash

question 237

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When preparing the operating activities section of the statement of cash flows using the indirect method, a decrease in accounts receivable is subtracted from net income.


Definitions:

Inverse Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that consumers are willing to purchase, plotted with price on the vertical axis and quantity on the horizontal axis.

Marginal Costs

The growth in total expenditure associated with the creation of one more unit of a good or service.

Perfect Price Discrimination

A pricing strategy where a seller charges the maximum possible price for each unit consumed that the buyer is willing to pay, thus capturing the entire consumer surplus.

Total Profits

The entirety of earnings a company or individual makes after subtracting the total costs from the total revenues.

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