When Preparing the Operating Activities Section of a Statement of Cash

question 30

Multiple Choice

When preparing the operating activities section of a statement of cash flows using the indirect method, various adjustments are needed.Which of the following adjustments is incorrectly stated?

• A)Deduct any increases in inventories from net income.
• B)Deduct any decreases in non-cash current liabilities from net income.
• C)Add depreciation and amortization expense to net income.
• D)Add any gain on the sale of equipment.

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Definitions:

Environmental Stressors

Physical or psychological stimuli in the environment that trigger stress responses in individuals.

Internal Conflict

A psychological struggle within the mind of an individual, often involving opposing needs, desires, or emotions.

Behavioral Impulses

Innate, often sudden urges to act in a particular way, which can be a response to external or internal stimuli and may not always align with long-term goals.

Frustration

The feelings that occur in any situation in which the pursuit of some goal is thwarted.