When Using the Indirect Method,a Decrease in a Current Asset

question 73

Multiple Choice

When using the indirect method,a decrease in a current asset (other than cash or cash equivalents) is:

• A) subtracted from current liabilities in the cash flows from financing activities section.
• B) subtracted from net income in the cash flows from operating activities section.
• C) added to net income in the cash flows from operating activities section.
• D) added in the cash flows from investing activities section.

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Definitions:

Diminishing Marginal Returns

An economic principle stating that as one factor of production increases while others remain constant, the incremental gains in output will eventually decrease.

Input

Resources such as labor, materials, and capital used in the production of goods and services.

Average Fixed Cost

The fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced.

Output

The total quantity of goods or services produced by a firm or economy over a specific period.