When Using the Indirect Method to Calculate and Report Net

question 58

Multiple Choice

When using the indirect method to calculate and report net cash provided or used by operating activities,which of the following is subtracted from net income?

• A)Decrease in income taxes payable.
• B)Depreciation expense.
• C)Amortization of intangible assets.
• D)Bad debts expense.
• E)Decrease in merchandise inventory.

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, reflecting the opportunity cost of capital.

Net Cash Inflows

The difference between all cash inflows and outflows within a specific period, reflecting the company’s cash position.

Working Capital

The measure of a company's short-term liquidity, calculated as current assets minus current liabilities.

Salvage Value

The approximated financial value of an asset at the termination of its usability.