In Converting Net Income to Net Cash Provided by Operating

question 78

Multiple Choice

In converting net income to net cash provided by operating activities using the indirect method:

• A)decreases in accounts receivable and increases in prepaid expenses are added.
• B)decreases in inventory and increases in accrued liabilities are added.
• C)decreases in accounts payable and decreases in inventory are deducted.
• D)increases in accounts receivable and increases in accrued liabilities are deducted.

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Definitions:

Households

Economic units consisting of all the people who occupy a housing unit, making decisions about resource allocation, consumption, and labor supply.

Goods and Services

Physical items (goods) and intangible benefits (services) that fulfill human wants or needs.

Factors of Production

Resources used in the production of goods and services, traditionally categorized as land, labor, capital, and entrepreneurship.

Circular-Flow Diagram

An illustrative depiction of the economy, highlighting the movement of currency among firms and households within different markets.