A Company Uses the Indirect Method to Prepare the Statement

question 52

Multiple Choice

A company uses the indirect method to prepare the statement of cash flows. In determining the net cash flow from operating activities, which of the following items would be added to net income?

• A)An increase in dividends paid would be added to net income.
• B)An increase in accrued liabilities would be added to net income.
• C)A decrease in accounts payable would be added to net income.
• D)A gain on the sale of land would be added to net income.

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Definitions:

Indorsements

The act of signing a document, typically on the back of a negotiable instrument like a check, signifying agreement, approval, or endorsement of its contents.

Indorsee

The person to whom the rights under a negotiable instrument are transferred by way of endorsement.

Payment

A transfer of money or goods from one party to another in exchange for goods, services, or to fulfill a legal obligation.

Article 3

Typically refers to a specific section within a larger document, like a constitution or treaty, where its contents vary depending on the document.