A Company Uses the Indirect Method to Prepare the Statement

question 64

Multiple Choice

A company uses the indirect method to prepare the statement of cash flows.It presents the following data on its financial statements:

*Relates solely to the acquisition of inventory
What will appear in the operating activities section related to inventory?

• A)The decrease of $21,000 will be subtracted from net income.
• B)The decrease of $21,000 will be subtracted from cost of goods sold.
• C)The decrease of $21,000 will be added to net income.
• D)The decrease of $21,000 will be added to cost of goods sold.

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Definitions:

O-Horizon

The uppermost layer of soil, primarily composed of organic matter, including decomposed leaves, twigs, and other plant material.

Arid Climate

A dry climate with very little precipitation, insufficient to sustain much plant life, typically found in desert regions.

Slope Failures

A general term for various types of mass wasting or landslides that occur when a slope becomes unstable and collapses.

Rate of Movement

The speed at which a certain object or substance moves through space or a medium.