Match Each Item with the Correct Letter Below to Indicate

question 195

Essay

Match each item with the correct letter below to indicate how each revenue or expense account on the income statement is adjusted when using the direct method to determine net cash flow provided by operating activities.
Account Balance Change
1._____ Increase in Accrued Expenses
2._____ Decrease in Accounts Receivable
3._____ Decrease in Unearned Income
4._____ Increase in Prepaid Expenses
5._____ Decrease in Accounts Payable
6._____ Increase in Long-Term Notes Payable
7._____ Decrease in Prepaid Insurance
8._____ Increase in Inventory
9._____ Increase in Interest Payable
10._____ Increase in Accumulated Depreciation
Type of Adjustment
A - Add item to related revenue or expense account balance
S - Subtract item from related revenue or expense account balance
N - No adjustment necessary

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Definitions:

Lump Sum

A lump sum is a single payment of money, as opposed to making payments over time in installments.

Interest Rate

The portion of a loan that accrues interest, regularly described as an annual percentage of the loan’s remaining debt.