Assume the Indirect Method Is Used to Compute Cash Flows

question 87

Essay

Assume the indirect method is used to compute cash flows from operations. For each item listed below, indicate the effect on net income in arriving at cash flows from operations by choosing one of the following code letters.
1. Increase in accounts receivable
2. Increase in inventory
3. Decrease in prepaid expenses
4. Decrease in accounts payable
5. Increase in accrued liabilities
6. Increase in income taxes payable
7. Depreciation expense
8. Loss on sale of investment
9. Gain on disposal of equipment
10. Amortization expense

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Definitions:

Strategic Planning

Involves the formulation and implementation of major goals and initiatives, taken by an organization's top management based on consideration of resources and an assessment of the internal and external environments in which the organization competes.

Long-Term Goals

Objectives or desired outcomes that a person, organization, or project aims to achieve over an extended period.

Operational

Pertaining to the operations or functioning of a system or organization, often involving the day-to-day activities necessary for running it effectively.

Organizational Objectives

The specific goals that a company sets out to achieve, which guide its operations and strategic planning.