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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