When Preparing the Operating Activities Section of the Statement of Cash

question 94

True/False

When preparing the operating activities section of the statement of cash flows using the indirect method,decreases in current assets are subtracted from net income.

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Definitions:

Gains and Losses

The increase (gains) or decrease (losses) in equity resulting from business activities and transactions not related directly to the primary operations of the company.

Income Statement

A report detailing a company's financial activities, including income, expenditures, and net earnings for a particular period.

Income from Operations

The earnings of a company from its core business operations, excluding income from other sources and expenses like taxes.

Return on Assets Ratio

A measure of profitability that indicates how efficiently a company is using its assets to generate earnings.