In Determining Net Cash Flows from Operating Activities, a Decrease

question 56

Multiple Choice

In determining net cash flows from operating activities, a decrease in salaries payable during a period

• A)means that income on an accrual basis is equal to income on a cash basis.
• B)must be added to net income under the indirect method.
• C)creates a cash outflow to pay for salaries that were previously accrued.
• D)creates a cash inflow from employees.

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Definitions:

Consequential Damages

Losses incurred as an indirect result of an event, beyond the immediate physical damage or loss.

Unconscionable

Referring to actions or terms that are excessively unfair or unethical to one party in a way that shocks the conscience.

Essential Purpose

The primary or most important goal or function of an object, policy, or legal contract.

Adequate Refund

A reimbursement that is fair and reasonable under the circumstances, often related to the return of purchased goods or services.