When Preparing a Statement of Cash Flows (Indirect Method), Which

question 51

Multiple Choice

When preparing a statement of cash flows (indirect method) , which of the following is not an adjustment to reconcile net income to net cash provided by operating activities?

• A)A change in interest payable
• B)A change in dividends payable
• C)A change in income taxes payable
• D)All of these answer choices are adjustments.

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Definitions:

Nominal Rate of Interest

The stated interest rate on a loan or financial asset, without adjustment for inflation or other factors.

Real Rate of Interest

The inflation-adjusted interest rate, which shows the actual cost of borrowing and the genuine return for lenders or investors.

Inflation Rate

The rate at which prices for all goods and services climb, resulting in a decrease in the ability to purchase.

Holding-Period Return

The return on an investment over the period it is held.