When the Indirect Method Is Used to Determine Operating Cash

question 61

Multiple Choice

When the indirect method is used to determine operating cash flows,how is the issuance of shares to retire a long-term debt shown on a statement of cash flows?

• A) as an operating activity
• B) as an investing activity
• C) as a financing activity
• D) as a noncash investing or financing activity

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Definitions:

Total Liabilities

The aggregate of all debts and financial obligations a company owes to external parties.

Contra-Liability Account

An account that reduces the amount of a liability, often used to record discounts or allowances that decrease the total amount owed by a company.

Cash Inflow

The cumulative sum of funds flowing into a company, usually originating from its operations, investments, and financial activities.

Semiannually

Occurring twice a year, typically every six months.