On the Statement of Cash Flows Using the Indirect Method

question 150

Multiple Choice

On the statement of cash flows using the indirect method patent amortization expense will

• A) be added to net income in the operating section.
• B) be deducted from net income in the operating section.
• C) appear as an inflow of cash in the investing section.
• D) appear as an outflow of cash in the investing section.

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Definitions:

Net Income

The residual financial benefit a company holds after reducing total income by all expenditures and tax payments.

Owner's Drawings Account

An account that tracks the funds withdrawn by the owner from the company for personal use.

Closing Entry

Journal entries used to transfer temporary account balances to permanent accounts and to reset the balances of temporary accounts to zero at the end of each accounting period.

Revenue Accounts

Accounts used to record the income generated from a company’s core operating activities.