The Indirect Method Starts with Net Earnings and Converts Them

question 45

Multiple Choice

The indirect method starts with net earnings and converts them to net cash provided by operating activities. This means that:

• A) the indirect method starts with net earnings and adds back all the expenses relating to operating activities.
• B) the indirect method calculates net earnings as the difference between net assets and net liabilities.
• C) the indirect method adjusts net earnings, for items that affected reported net earnings but did not affect cash.
• D) the indirect method adjusts net earnings for contra account balances.

---

Definitions:

Standardized Achievement Test Scores

Quantitative measurements obtained from exams that assess knowledge in specific areas, designed to provide a common metric for comparing the academic abilities of diverse individuals or groups.

Lifetime Income

The total amount of money earned by an individual over the course of their career, often used as a measure of economic success or stability.

Chunks

In cognitive psychology, chunks refer to units of information organized in memory, which can be efficiently recalled as groups or categories.

Rote Learning

A memorization technique based on repetition.