Using the Indirect Method, Where Does the Decrease in Accounts

question 31

Multiple Choice

Using the indirect method, where does the decrease in accounts payable appear in a consolidated statement of cash flows?

• A) $7,000 increase to net income as an operating activity.
• B) $7,000 decrease to net income as an operating activity.
• C) $5,600 increase to net income as an operating activity.
• D) $5,600 decrease to net income as an operating activity.
• E) $7,000 increase as a financing activity.

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Definitions:

Fixed Cost

A business expense that remains constant regardless of how much goods or services are produced.

Average Variable Cost

The total variable costs of production divided by the number of units produced, representing the variable cost per unit.

Instructional Modules

Structured units of teaching material or academic content designed for educational purposes.

Variable Cost

Costs that change in proportion to the level of production or business activity.