All of the Following Might Appear on an Indirect Method

question 71

Multiple Choice

All of the following might appear on an indirect method statement of cash flows except:

• A) decrease in inventory
• B) depreciation expense
• C) interest received on notes receivable
• D) loss on sale of capital assets

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Definitions:

Bondholders

Bondholders are investors or entities that hold bond investments, and thus are creditors to the issuer of the bond, entitled to interest payments and repayment of principal.

Gain or Loss

This refers to the financial result that occurs when the selling price of an asset differs from its original purchase price, either higher (gain) or lower (loss).

Bonds

Fixed income investment products that represent loans made by an investor to a borrower, typically corporate or governmental.

Effective Interest Method

A technique used in accounting for amortizing the cost of a bond premium or discount over the life of the bond in a way that results in a constant rate of interest over the period.