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:

Subscriptions Receivable

Amounts owed by customers for subscription services that have been billed but not yet paid.

Stock Warrants

Certificates granting the holder the right to purchase shares of stock at a specified price before a set expiration date.

Option Price

The price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Subscription Contract

An agreement between a provider and a customer for the provision of services or delivery of goods over a specified period in return for payment.