What Is the Effect of the Adjusting Entry for Bad

question 167

Multiple Choice

What is the effect of the adjusting entry for bad debts expense on the Statement of cash flows?

• A)no effect
• B)a decrease in Cash from operating activities
• C)an increase in Cash from operating activities
• D)a decrease in Cash from financing activities

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Definitions:

Reserve Deposits

Reserve Deposits are funds that commercial banks hold in reserve, either in their vaults or deposited with a central bank, to meet regulatory requirements and ensure liquidity.

Federal Reserve Bank

The central banking system of the United States, responsible for managing the country's monetary policy and regulating its financial institutions.

Reserve Requirement

The minimum amount of reserves that banks are required to hold by law, usually a percentage of their deposits, to ensure bank liquidity.

Open Market Operations

Central bank activities involving the buying and selling of government securities to control the money supply and interest rates.