Under the Indirect Method of Preparing the Operating Section of the Statement

question 64

Multiple Choice

Under the indirect method of preparing the operating section of the statement of cash flows, net cash provided by operating activities is $207,000. If the direct method of preparing the operating section of the statement of cash flows was used:

• A) cash provided by operating activities would be the same, $207,000.
• B) cash provided by operating activities would be more than $207,000.
• C) cash provided by operating activities would be less than $207,000.
• D) cash provided by financing and investing activities would equal $207,000.

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Definitions:

Network Externality

A situation where the value or utility of a product or service to one user increases with the number of other users of the same or compatible products or services.

Marginal Private Benefits

The additional benefit received by consumers or producers from consuming or producing one more unit of a good or service.

Negative Externalities

Unintended adverse effects on third parties not involved in an economic transaction, like pollution.

Monopolistic Competition

A market structure in which there are many competing producers in an industry, each producer sells a differentiated product, and there is free entry and exit into and from the industry in the long run.