When Preparing the Operating Section of the Statement of Cash

question 60

True/False

When preparing the operating section of the statement of cash flows using the indirect method,a decrease in accounts receivable is subtracted from net income.

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Definitions:

Capital Lease

A lease agreement in which the lessee records the leased asset as if it were purchased.

Operating Lease

A contract in which the ownership of the asset remains with the lessor while the lessee has the right to use the asset, without the option to purchase, for a certain period.

Operating Leases

Leases for which the lessee uses an asset for a shorter period than its useful life, and the lessor retains ownership of the asset.

Tax Purposes

The intentions or objectives related to compliance with tax laws and regulations, including the reporting of income, expenses, and other relevant financial information.