If a Company Uses the Indirect Method to Prepare the Statement

question 138

Multiple Choice

If a company uses the indirect method to prepare the statement of cash flows, which of the following items would be added to net income to determine the net cash flow from operating activities?

• A)An increase in inventory added to net income to determine the net cash flow from operating activities in the statement of cash flows.
• B)A decrease in accounts receivable would be added to net income to determine the net cash flow from operating activities in the statement of cash flows.
• C)A decrease in accounts payable would be added to net income to determine the net cash flow from operating activities in the statement of cash flows.
• D)An increase in preferred dividends payable would be added to net income to determine the net cash flow from operating activities in the statement of cash flows.

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Definitions:

Simple Random Sample

A subset of a statistical population in which each member has an equal chance of being chosen, resulting in a sample that is representative of the population.

Expected Value

The long-run average value of repetitions of the experiment it represents.

Sample Proportion

The quotient of the number of successful outcomes to the total number of observations in a sample, often used as an estimate of the population proportion.

Number of Fish Tanks

The count of containers used to hold fish, typically utilized for keeping aquatic pets or for breeding.