In the Statement of Cash Flows (Indirect Method),which Event Would

question 122

Multiple Choice

In the statement of cash flows (indirect method) ,which event would cause net income to be increased?

• A)An increase in Inventory
• B)A decrease in Prepaid Insurance
• C)A decrease in Accounts Payable
• D)An increase in Accounts Receivable

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Definitions:

Spot Exchange Rate

The immediate rate at which one can purchase or sell currency for on-the-spot delivery.

London Interbank Offer Rate

LIBOR; a benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans.

Covered Interest Arbitrage

A trading strategy in which an investor uses a forward contract to hedge against exchange rate fluctuations, exploiting the interest rate differentials between two countries.

Uncovered Interest Parity

A financial theory suggesting that expected differences in interest rates between two countries will equal the expected change in exchange rates between their currencies.