When the Indirect Method Is Used to Determine Net Cash

question 173

Multiple Choice

When the indirect method is used to determine net cash provided by (used in) operating activities,adding an increase in Interest Payable to net income eliminates the effect of recording expenses that:

• A)increased net income,but did not impact cash.
• B)decreased net income,but did not impact cash.
• C)increased net income and increased cash flow.
• D)decreased net income and decreased cash flow.

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Definitions:

Market Structure

The features of a market, including its structure, that affect how competition and pricing are determined.

Monopolistic Competition

A common form of industry (market) structure characterized by a large number of firms, no barriers to entry, and product differentiation.

Perfectly Competitive

A market structure where there are many sellers and buyers, homogeneous products, and no single buyer or seller can influence prices.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for product differentiation and some control over price.