When Using the Indirect Method to Prepare the Operating Section

question 93

Multiple Choice

When using the indirect method to prepare the operating section of a statement of cash flows, which of the following is added to net income to compute cash flows from operating activities?

• A) gain on sale of long-term asset
• B) decrease in deferred tax liability
• C) bond discount amortization
• D) All of the above

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Definitions:

Endoplasmic Reticulum

A network of membranous tubules within the cytoplasm of a cell, involved in protein and lipid synthesis, and detoxification processes.

Lysosome

Membrane-bounded vesicle containing hydrolytic enzymes that function as intracellular digestive enzymes.

Ribosomes

Molecular structures within cells where proteins are synthesized, following the instructions encoded in messenger RNA.

Mitochondria

Organelles within cells that generate most of the cell's supply of adenosine triphosphate (ATP), used as a source of chemical energy.