Using the Indirect Method, Where Does the Decrease in Accounts

question 101

Multiple Choice

Using the indirect method, where does the decrease in accounts receivable appear in a consolidated statement of cash flows?

• A) $8,000 increase to net income as an operating activity.
• B) $8,000 decrease to net income as an operating activity.
• C) $6,400 increase to net income as an operating activity.
• D) $6,400 decrease to net income as an operating activity.
• E) $8,000 increase as an investing activity.

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Definitions:

Physical Material

Substances or components that have mass and occupy space; can be observed and measured physically.

Constant

A fixed value that does not change.

Particles

The small, localized physical entities that make up the structure of matter, ranging from elementary particles to atoms and molecules.

Ordered State

A condition of a system in which its components are arranged in a well-organized pattern or structure, often resulting in reduced entropy.