A Company Uses the Indirect Method to Prepare the Statement

question 106

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 accounts receivable?

• A)The increase of $66,000 will be subtracted from net income.
• B)The increase of $66,000 will be added to net income.
• C)The increase of $66,000 will be added to sales revenue.
• D)The increase of $66,000 will be subtracted from sales revenue.

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Definitions:

Price-fixing

An illegal agreement among competitors to fix prices, set production levels, or divide markets, to ensure mutual economic benefit.

Antitrust Law

Legislation designed to promote competition and regulate and prevent monopolies or other practices that restrain trade.

Legal Cartel Theory

A concept that explores the legality and economic implications of a group of firms controlling the market by regulating prices and output like a cartel.

Occupational Licensing

The laws of state or local governments that require that a worker satisfy certain specified requirements and obtain a license from a licensing board before engaging in a particular occupation.