Rock Company Uses the Indirect Method to Prepare Its Statement

question 40

Multiple Choice

Rock Company uses the indirect method to prepare its statement of cash flows. Rock's Accumulated Depreciation- Equipment account increased during the period. Rock did not purchase or sell equipment during the period. The increase in Accumulated Depreciation- Equipment is:

• A)added to net income to determine net cash provided by operating activities.
• B)not reported.
• C)reported in the investing activities section.
• D)deducted from net income to determine net cash provided by operating activities.

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Definitions:

Insurance Co-pays

Insurance co-pays are fixed amounts that a policyholder must pay out-of-pocket for a covered healthcare service, with the insurance company covering the remaining costs.

Deductibles

The amount paid out of pocket by the policyholder before an insurance policy begins to cover expenses.

Consumer Surplus

The difference between the maximum price a consumer is (or consumers are) willing to pay for an additional unit of a product and its market price; the triangular area below the demand curve and above the market price.

Willing To Pay

The maximum amount an individual is prepared to spend to purchase a good or service or to avoid something undesirable.