On a Statement of Cash Flows, an Increase in a Prepaid

question 50

Multiple Choice

On a statement of cash flows, an increase in a prepaid expense:

• A)is included in computing cash flows from operating activities.
• B)is included in computing cash flows from investing activities.
• C)is included in computing cash flows from financing activities.
• D)is not used in computing cash flows.

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Definitions:

Bond Discount

The gap between what a bond is worth (its face value) and the lower amount it is sold for in the market.

Amortization Methods

Various techniques used to gradually write off the initial cost of an intangible asset over a period.

Amortization

The process of spreading out a loan or intangible asset cost over a specified period of time.

Installment Notes

Long-term debts that are paid back in regular, periodic payments over time, which include both the principal and interest.