When Using the Indirect Method to Calculate and Report Net

question 58

Multiple Choice

When using the indirect method to calculate and report net cash provided or used by operating activities,which of the following is subtracted from net income?

• A)Decrease in income taxes payable.
• B)Depreciation expense.
• C)Amortization of intangible assets.
• D)Bad debts expense.
• E)Decrease in merchandise inventory.

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Definitions:

Mental Set

A psychological term for the tendency to approach situations in a certain way because of past experiences or a specific mindset.

Noncompensatory Modeling

A decision-making approach where a satisfactory level of performance in one attribute does not compensate for a poor performance in another.

Means-end Analysis

A problem-solving strategy that involves identifying the differences between the current situation and the desired goal and steps to reduce these differences.

Working Backward

A problem-solving strategy that involves starting from the desired outcome and working in reverse order to find the solution.