Which of the Following Statements Is True When Using the Indirect

question 66

Multiple Choice

Which of the following statements is true when using the indirect method of preparing the Operating Activities category of the statement of cash flows?

• A)Inventory decreases are subtracted from net income.
• B)Inventory increases are subtracted from net income.
• C)Inventory increases are added to net income.
• D)None of these statements are true.

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Definitions:

Accounts Payable

Money owed by a company to its creditors for products and services that have been received but not yet paid for.

Balance Sheet

A Balance Sheet is a financial statement that presents a company's assets, liabilities, and shareholders' equity at a specific point in time.

Balance Sheet Equation

an accounting formula that represents the relationship between assets, liabilities, and equity (Assets = Liabilities + Equity).

Liabilities

Financial obligations or debts that a company owes to others, which must be settled through the transfer of assets or services.