Which of the Following Would Be a Reasonable Short-Cut Approach

question 41

Multiple Choice

Which of the following would be a reasonable short-cut approach to calculating cash from operations?

• A)Net income plus amortization
• B)Net income minus amortization
• C)Net income plus the increase in accounts receivable
• D)Net income minus the increase in accounts receivable

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Definitions:

Short-Term Investment

Financial assets that are expected to be converted into cash or sold within a year.

Monetary Assets

Monetary assets are financial assets that are cash or can be quickly converted into a known amount of cash with minimal risk of changes in value.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Notes Receivable

Financial assets representing money owed to the holder of the note, usually in the form of a formal written agreement.