In Preparing the Statement of Cash Flows by the Indirect

question 105

Multiple Choice

In preparing the statement of cash flows by the indirect method,which of the following is a correct statement of one of the general rules to convert net income to a cash-basis equivalent?

• A) Losses on the sale of long term assets are subtracted from net income.
• B) All non-cashnoncash expenses and losses are subtracted from net income.
• C) Increases in current assets are subtracted from net income.
• D) Decreases in current liabilities are added to net income.

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Definitions:

Achievement Drive

An individual's innate push to set and accomplish challenging goals and persist in the face of obstacles.

Hierarchy and Routine

A structured order and established processes within an organization to ensure efficiency and predictability.

Interpersonal Skills

Abilities used by individuals to interact effectively and harmoniously with other people.

Transformational Style

A leadership approach focused on inspiring and motivating followers to exceed their own interests for the good of the group or organization by effecting significant change.