If the Indirect Method Is Used to Prepare a Statement

question 4

Multiple Choice

If the indirect method is used to prepare a statement of cash flows,which of the following would be deducted from net income to arrive at net cash flows from operating activities?

• A) Increase in accounts payable
• B) Increase in income taxes payable
• C) Increase in accounts receivable
• D) Decrease in prepaid rent

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Definitions:

General Motors

A multinational corporation headquartered in the United States that designs, manufactures, markets, and distributes vehicles and vehicle parts.

Pursuit of Happiness

A fundamental right mentioned in the Declaration of Independence to freely pursue joy and live life in a way that makes one happy, as long as one does not do anything illegal or violate the rights of others.