A Company Uses the Indirect Method to Prepare the Statement

question 4

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 accounts receivable?

• A)The increase of $15,000 will be subtracted from sales revenue.
• B)The increase of $15,000 will be added to net income.
• C)The increase of $15,000 will be subtracted from net income.
• D)The increase of $15,000 will be added to sales revenue.

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Definitions:

Compounded Semi-Annually

Interest on an investment or loan calculated twice a year and added to the principal.

Economic Values

The worth of goods or services as determined by the market or the intrinsic importance or utility they offer to individuals.

Compounded Monthly

Interest on a loan or investment calculated monthly and added to the principal sum for the calculation of subsequent interest.

Compounded Annually

Interest calculation and accumulation once per year on the principal amount of an investment or loan.