In Preparing a Statement of Cash Flows Using the Indirect

question 12

Multiple Choice

In preparing a statement of cash flows using the indirect method, an increase in an unearned revenue account should

• A) be shown as a financing activity.
• B) be shown as a deduction from net income in computing net cash flows from operating activities.
• C) not be shown on the statement of cash flows.
• D) be shown as an addition to net income in computing net cash flows from operating activities.

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Definitions:

Stored Glycogen

A form of glucose stored in the liver and muscles, which can be broken down to supply energy when needed.

Glucose

A simple sugar that is an important energy source in living organisms and is a component of many carbohydrates.

Hamstring Group

A collection of three muscles at the back of the thigh that are responsible for bending the knee.

Teres Major

A muscle of the upper limb that helps in the rotation and adduction of the arm.