For Reporting Operating Cash Flows Under the Indirect Method, a Company

question 57

True/False

For reporting operating cash flows under the indirect method, a company adds an unrealized holding loss on trading securities to net income to help adjust net income from an accrual basis to a cash basis.

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Definitions:

Overstatement

An error or inaccuracy in accounting records or financial statements where the value of assets, revenues, or profit is recorded higher than the actual amounts.

Net Realizable Value

The estimated selling price of goods minus the cost of their sale or disposal, used in determining the value of inventory on the balance sheet and for assessing asset impairment.

Write-Down

An accounting practice of reducing the book value of an asset because it's overvalued compared to the market value.

Financial Statements

Compiled reports detailing the financial position, performance, and cash flows of a business over a specific period.