When the Direct Method Is Used to Determine the Net

question 18

Multiple Choice

When the direct method is used to determine the net cash flow from operating activities, other operating expenses are converted into cash outflows by:

• A) adding changes in prepaid expenses and accrued liabilities to other expenses.
• B) subtracting increases in prepaid expenses and subtracting decreases in accrued liabilities from other expenses.
• C) adding increases in prepaid expenses and adding decreases in accrued liabilities to other expenses.
• D) subtracting changes in prepaid expenses and accrued liabilities from other expenses.

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Definitions:

Yield

The income return on an investment, such as the interest or dividends received, expressed as a percentage of the investment's cost.

Coupon Rate

An annual interest percentage a bond generates, reflected against its original price.

Monetary Policy

Economic strategy chosen by a government or central bank to control the supply of money, influencing interest rates and overall economic activity.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including cash, bank deposits, and other liquid assets.