A Company Is Preparing the Cash Flow from Operations (CFO)

question 32

Multiple Choice

A company is preparing the cash flow from operations (CFO) section of its cash flow statement.Amortization expense for the year was $25,000.Which of the following statements is true?

• A)Amortization expense should be added back to net income to calculate CFO if they are using the indirect method.
• B)Amortization expense should be deducted from net income to calculate CFO if they are using the indirect method.
• C)Amortization expense should be added back to net income to calculate CFO if they are using the direct method.
• D)Amortization expense should be deducted from net income to calculate CFO if they are using the direct method.

Recognize the importance of real wage increases and how they are calculated.

Understand the role and implications of expectancy theory in designing effective pay systems.

Comprehend the significance of external and internal factors that influence pay rates.

Differentiate between various job evaluation systems and their purpose.

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Definitions:

Issuing Corporation

A company that sells or offers its shares to the public or to private investors.

Amortization

The process of spreading out a loan into a series of fixed payments over time, or the gradual write-off of the cost of an intangible asset over its useful life.

Bond Premium

The amount by which the market price of a bond exceeds its face value, typically resulting when market interest rates are lower than the bond's coupon rate.

Interest Expense

The cost incurred by an entity for borrowed funds, reflecting the interest payments on debt obligations.