In Calculating Net Cash from Operating Activities Using the Indirect

question 154

Multiple Choice

In calculating net cash from operating activities using the indirect method, depreciation expense is

• A) deducted from net income.
• B) added to net income.
• C) ignored because it does not affect income.
• D) ignored because it is included in the investing section.

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Definitions:

Outputs

The goods or services produced by a company or an economy.

Production Process

The series of actions or steps taken in order to create a product or service.

Goods and Services

The physical items (goods) and intangible assistance or activities (services) that fulfill the needs or wants of consumers, forming the basis of all economic activities.

Comparative Advantage

The capacity of a country or firm to produce a particular good or service at a lower marginal and opportunity cost over another.