A Cash Flow Statement That Is Prepared Under the Indirect

question 39

Multiple Choice

A cash flow statement that is prepared under the indirect method adds and subtracts certain items to the base number.How would decreases in unearned revenues be shown? They would be shown as

• A)a deduction from net income
• B)an addition to net income
• C)a deduction from sales
• D)an addition to sales

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Definitions:

Total Revenue

The total amount of money generated by a firm or entity from its business activities, calculated by multiplying the price by the quantity sold.

Variable Costs

Expenses that vary directly with the level of production or sales volume, such as materials and labor.

Profitable

Generating revenue that exceeds the expenses, costs, and taxes needed to sustain the activity.

Average Total Cost

The cost per unit of output, calculated by dividing the overall production costs by the number of units produced.