When the Indirect Method Is Used to Determine Operating Cash

question 117

Multiple Choice

When the indirect method is used to determine operating cash flows,how is the decrease in accounts payable shown on the statement of cash flows?

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

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Definitions:

Average Inventory

The average amount of stock held by a company over a specified period, calculated to understand inventory levels and manage them efficiently.

Setup Times

The duration required to prepare equipment, machines, or systems for production or operation, including adjustments for new tasks or products.

Competitive Advantage

The attribute that allows an organization to outperform its competitors, often through superior quality, innovation, or efficiency.

Faster Response

The ability of a company or system to react swiftly to customer demands or market changes.