While Preparing a Statement of Cash Flows Using the Indirect

question 122

Multiple Choice

While preparing a statement of cash flows using the indirect method, the Depreciation Expense:

• A)is added back as an adjustment to Net Income in the operating activities section.
• B)is shown as a negative cash flow in the investing activities section.
• C)is added back to Purchases of Plant Assets under investing activities.
• D)is shown as a negative cash flow under operating activities.

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Definitions:

User Cost

User cost comprises the costs associated with the use of a product or service, including wear and tear, maintenance, and the opportunity cost of forgone alternatives.

Extract

To remove or obtain a substance from a source through a process.

Resource

An asset or input used to produce goods and services, such as labor, capital, land, and knowledge.

Nonrenewable Resource

A natural resource that cannot be readily replaced by natural means at a quick enough pace to keep up with consumption.