When Using the Indirect Method to Complete the Cash Flows

question 77

Multiple Choice

When using the indirect method to complete the cash flows from operating activities section of the statement of cash flows,what is the proper disposition of depreciation expense?

• A)Subtract depreciation from net income.
• B)Add depreciation to net income.
• C)Disregard depreciation because it relates to an investing activity.
• D)Disregard depreciation because it is a noncash expense.

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Definitions:

Registered Form

A security that is registered in the issuing corporation's books in the name of the owner, requiring transfer through formal procedures.

Bond Yields

The return an investor realizes on a bond, often expressed as an annual percentage.

Interest Rate Risk

The potential for investment losses due to fluctuations in interest rates that affect the value of interest-bearing assets.

Real Rate

The interest rate adjusted for inflation, reflecting the real cost of funds to the borrower and the real yield to the lender.