Under the Indirect Method of Preparing a Statement of Cash

question 107

Multiple Choice

Under the indirect method of preparing a statement of cash flows,cash disbursed for the acquisition of a capital asset is:

• A) added in the investing activities section
• B) added in the financing activities section
• C) subtracted in the operating activities section
• D) subtracted in the investing activities section

---

Definitions:

Good Faith

The sincere intention to be fair, open, and honest, regardless of the outcome of an agreement or transaction.

Specific Performance

A court order compelling a party to execute a contract according to its precise terms when monetary compensation is inadequate.

Picasso Painting

An artwork created by Pablo Picasso, a Spanish painter and sculptor known for co-founding the Cubist movement.

Purchase of Light Bulbs

The act of acquiring light bulbs through buying, which involves selecting the desired type, wattage, and technology (like LED, incandescent).