Colorado Company Uses the Indirect Method to Prepare the Statement

question 137

Multiple Choice

Colorado Company uses the indirect method to prepare the statement of cash flows.Refer to the following section of the comparative balance sheet: How will the change in Accrued Liabilities be shown on the statement of cash flows?

• A)as an addition to Net Income
• B)as a deduction from Net Income
• C)as a deduction from operating cash flows
• D)as an addition to investing cash flows

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Definitions:

Process-Oriented Layout

A layout that deals with low-volume, high-variety production in which like machines and equipment are grouped together.

Material Handling Costs

Expenses involved in moving, protecting, storing and controlling materials throughout the manufacturing process.

Fixed-Position Layout

A system that addresses the layout requirements of stationary projects.