If a Company Uses the Indirect Method to Prepare the Statement

question 136

Multiple Choice

If a company uses the indirect method to prepare the statement of cash flows, how will the adjustment to reflect the amount of cash paid for interest be presented on the statement?

• A)The adjustment will be for the increase or decrease in accounts receivable for the period and will adjust net income in the operating activities section.
• B)The adjustment will be for the increase or decrease in inventory for the period and will adjust net income in the operating activities section.
• C)The adjustment will be for the increase or decrease in accounts payable for the period and will adjust net income in the operating activities section.
• D)The adjustment will be for the increase or decrease in interest payable for the period and will adjust net income in the operating activities section.

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Definitions:

Referral

The process of recommending a product or service to others, often encouraged through incentives.

Data Process

The series of operations on data to retrieve, transform, and classify information.

Collecting

The process of accumulating items or data systematically for a specific purpose or passion.

Message/Crisis Control

A public relations strategy used to mitigate damage to an organization's reputation during a crisis.