Assume the Indirect Method Is Used to Compute Net Cash

question 121

Multiple Choice

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Gain on Disposal of Equipment-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

• A) Add to net income to arrive at net cash flows from operating activities
• B) Subtract from net income to arrive at net cash flows from operating activities
• C) Not used to adjust net income to calculate net cash flows from operating activities

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Definitions:

Minimal Standard

A basic level of quality or requirement that is considered acceptable under legal or regulatory guidelines.

Deontology

The ethical theory which states that an action can be determined as ethical on the basis of right and wrong, regardless of its consequences.

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