When Using the Indirect Method to Prepare the Operating Activities

question 83

Multiple Choice

When using the indirect method to prepare the operating activities section of the statement of cash flows,how is an increase in noncash current assets handled?

• A)It is subtracted from net income in the cash flows from operating activities section.
• B)It is subtracted from current liabilities in the cash flows from financing activities section.
• C)It is added to net income in the cash flows from operating activities section.
• D)It is added to equipment purchases in the cash flows from investing activities section.

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Definitions:

Farsightedness

A common vision condition where distant objects are seen more clearly than close ones, also known as hyperopia.

Normal Eyeball

An eyeball that has proper shape and size, allowing for clear vision and normal focusing ability without the aid of corrective lenses.

Ciliary Muscles

The ring of smooth muscle fibers in the eye's middle layer that controls the lens's shape for focusing.

Cataract

A medical condition where the lens of the eye becomes progressively opaque, leading to blurred vision and, if untreated, blindness.