In Preparing a Statement of Cash Flows Using the Indirect

question 172

Multiple Choice

In preparing a statement of cash flows using the indirect method,the Depreciation Expense ________.

• A) is added back as an adjustment to Net Income in the operating activities section
• B) is shown as a negative cash flow in the investing activities section
• C) is added back to Purchases of Plant Assets under investing activities
• D) is shown as a negative cash flow under operating activities

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Definitions:

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Quota Price

The cost associated with acquiring a quota, which is a government-imposed limit on the quantity of a good that can be imported or exported.

Quota Rent

Revenue earned by the holder of a production or import quota, representing the market price minus the supply price under the quota limit.

Missed Opportunity

The failure to seize potential benefits due to lack of action or decision in a timely manner.