When Using the Indirect Method for Preparing the Statement of Cash

question 83

Multiple Choice

When using the indirect method for preparing the statement of cash flows,all of the following will appear in the Operating Activities section except

• A)an increase in deferred tax.
• B)depreciation expense on leased assets.
• C)interest expense.
• D)an increase in long-term liabilities.

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Definitions:

Interest Rate Collar

A risk management strategy used to limit exposure to interest rate fluctuations by setting upper and lower bounds.

Risk Exposure

Risk exposure is the measure of potential future losses that may result from business activities or investment decisions, due to risks that have been taken.

Variable-Rate Loan

A loan in which the interest rate can change over time, based on an underlying benchmark interest rate or index.