Brandon, Inc

question 98

Multiple Choice

Brandon, Inc.had a $1,000 decrease in accounts receivable during the year.Which of the following will appear on the statement of cash flows prepared using the indirect method?

• A)Add $1,000 to net income in order to arrive at net cash provided by operating activities.
• B)Deduct $1,000 from net income in order to arrive at net cash provided by operating activities.
• C)Deduct $1,000 to arrive at net cash flows from investing activities.
• D)Do not include the $1,000 in the statement of cash flows but show it in an accompanying schedule of non-cash transactions.

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Definitions:

Cost of Goods Sold

The exact costs incurred in the creation of a company’s sold goods, including the expenses for materials and labor.

Average Inventory

An estimation of the amount of inventory a company typically holds over a specific period, calculated as the average of the beginning and ending inventory.

Net Income

The company's net income, calculated by deducting all costs, taxes, and losses from its total revenue.

Profit Margin

A financial metric showing the percentage of revenue that exceeds the costs of goods sold, indicating the profitability of a company.