Assume the Indirect Method Is Used to Compute Net Cash

question 74

Multiple Choice

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Decrease in Accounts Payable-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

• A) Add to net income to arrive at net cash flows from operating activities
• B) Subtract from net income to arrive at net cash flows from operating activities
• C) Not used to adjust net income to calculate net cash flows from operating activities

---

Definitions:

Production Estimates

Projections or forecasts of the volume or quantity of goods that a company plans to manufacture in a given period.

Units

In the context of business, units refer to the individual items or quantities of a product or service that are produced or sold.

Production Budget

An estimation of the total costs to produce a set amount of goods over a specific period.

Units

In accounting and manufacturing, this refers to the individual countable items or quantities of a product or service that a company produces or transacts in.