A Company Uses the Indirect Method to Prepare the Statement

question 61

Multiple Choice

A company uses the indirect method to prepare the statement of cash flows.Which of the following items would be added to net income in determining the net cash flow from operating activities?

• A)A decrease in accounts receivable would be added to net income.
• B)An increase in inventory would be added to net income.
• C)A decrease in accounts payable would be added to net income.
• D)An increase in preferred dividends payable would be added to net income.

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Definitions:

Requesting Action

The act of asking someone to perform a specific task or duty.

Rebate

A partial refund following the purchase of a product, often used as a purchase incentive.

Discount

A reduction applied to the usual cost of goods or services, typically to encourage purchasing.

Research Evidence

Information and findings gathered through systematic investigation, used to support or refute an argument, hypothesis, or theory.