When Using the Indirect Method to Prepare the Operating Activities

question 66

Multiple Choice

When using the indirect method to prepare the operating activities section of the statement of cash flows,how is a decrease in current liabilities handled?

• A)It is subtracted from net income in the cash flows from operating activities section.
• B)It is subtracted from current assets in the cash flows from financing activities section.
• C)It is added to net income in the cash flows from operating activities section.
• D)It is added to inventory purchases in the cash flows from investing activities section.

Analyze the effects of changes in sales volume and selling price on net operating income.

Calculate break-even points and margin of safety in both units and dollars.

Understand the concept and application of the degree of operating leverage.

Employ the least-squares regression method for estimating cost behavior.

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