When Preparing the Statement of Cash Flows Using the Indirect

question 94

Multiple Choice

When preparing the statement of cash flows using the indirect method,which statement is INCORRECT?

• A)Gains on the sale of long-term assets are subtracted from net income.
• B)Losses on the sale of long-term assets are subtracted from net income.
• C)Depreciation expense is added to net income.
• D)Increases in current liabilities are added to net income.

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Definitions:

Communication Channels

The means through which information is transmitted from one party to another, including verbal, non-verbal, and electronic methods.

Formal Structures

The officially designated channels of communication and hierarchies within an organization that dictate how tasks are assigned and coordinated.

Vertical Layers

The hierarchical levels or stages within an organization or system, usually indicating positions of authority.

Management

The process of dealing with or controlling things or people, often within an organizational context.