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.

Recognize the use of annuities in calculating values of periodic payments, either for saving or loan repayments.

Demonstrate the ability to solve real-world problems involving single sums and annuities using appropriate financial formulas.

Recognize the importance of interest rates, compounding periods, and time in financial planning and decision-making.

Understand the fundamental concepts of probability including experiment, outcome, sample space, and event.

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Definitions:

Dividends In Arrears

Unpaid dividends on cumulative preferred stock that must be paid out before dividends can be issued to common shareholders.

Dividends In Arrears

Dividends on preferred stock that have not been paid in the period they are due but are still owed to shareholders.

Cumulative

Refers to the total amount accumulated over a period of time.

Common Stockholders

Individuals or entities that own shares in a corporation, giving them certain rights like voting on corporate matters.