Chisholm Associates Uses the Indirect Method to Prepare the Operating

question 17

Multiple Choice

Chisholm Associates uses the indirect method to prepare the operating activities section of the statement of cash flows.The following accounts and balances were drawn from the company's accounting records:

Net income for the period was $80,000.What is the net cash flows from operating activities?

• A)$70,400
• B)$65,600
• C)$76,000
• D)$94,400

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Definitions:

Free-Rider Problem

The inability of potential providers of an economically desirable good or service to obtain payment from those who benefit, because of nonexcludability.

Highly Profitable

Describing a business or activity that generates a significantly higher amount of earnings compared to its costs.

Private Firm

A business owned by private individuals or entities, not traded publicly and not owned by the government.

Good

A tangible item or consumable entity that can satisfy a want, need, or desire, making it useful or enjoyable to consumers.