If Inventory Decreases and Deferred Revenue Increase During an Accounting

question 40

Multiple Choice

If inventory decreases and deferred revenue increase during an accounting period while the indirect method is used,what does the company do with the changes in these accounts to calculate net cash flows from operating activities?

• A)Both are added to net income.
• B)The change in inventory is added to net income; the change in unearned revenue is subtracted.
• C)Both are subtracted from net income.
• D)The change in unearned revenue is added to net income; the change in inventory is subtracted.

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Definitions:

Self-absorption

A state in which an individual is excessively preoccupied with their own feelings, interests, or wellbeing.

Good Listening

The skill of actively engaging in listening by paying full attention, understanding, and responding thoughtfully to what is being said.

Being Criticized

Being criticized involves receiving critical feedback or negative judgement from others, which can be constructive and used for personal or professional improvement.

Good Listeners

Individuals skilled at actively engaging with and understanding spoken communication from others.