In the Operating Activities Section of a Statement of Cash

question 55

Essay

In the operating activities section of a statement of cash flows prepared using the indirect method certain items are added to, or subtracted from, net income. Why are changes in current accounts added or subtracted?

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Definitions:

Hornfels

A fine-grained metamorphic rock formed by the contact metamorphism of shale and other clay-rich rocks.

Foliation

The repetitive layering in metamorphic rocks, which occurs due to the reorientation of minerals under intense heat and pressure.

Thrust Fault

a type of reverse fault where the upper block, above the fault plane, moves up and over the lower block.

Metamorphic Rock

rock that has undergone transformation from an original form due to high pressure, high temperature, or both.