Using the Indirect Method to Prepare the Statement of Cash

question 34

Multiple Choice

Using the indirect method to prepare the statement of cash flows,which of the following statements is true?

• A) Decrease in current assets means a decrease in cash.
• B) Increase in current assets means an increase in cash.
• C) Increase in current liabilities means an increase in cash.
• D) Decrease in current liabilities means an increase in cash.

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Definitions:

Time-Value

The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.

Forgo

The act of giving up something, often as a sacrifice, in preference for something else considered to be of greater value.

Monetary

Relating to money or currency, typically involving the management, transfer, or creation of money.

Interest Rate

The amount charged by a lender to a borrower for the use of assets expressed as a percentage of the principal, influencing investment, spending, and economic growth.