Assume the Indirect Method Is Used to Compute Net Cash

question 33

Multiple Choice

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Loss on Disposal of Equipment-indicate the effect on net income in arriving at net cash flows from operating activities by choosing one of the following:

• A)Add to net income to arrive at net cash flows from operating activities.
• B)Subtract from net income to arrive at net cash flows from operating activities.
• C)Not used to adjust net income to calculate net cash flows from operating activities.

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Definitions:

Efficient

Achieving maximum productivity with minimum wasted effort or expense, often in the context of economic resource allocation.

Economy

The system by which goods and services are produced, distributed, and consumed within a society or geographic area.

Inefficient

The condition where resources are not used in the best possible way, often leading to waste and loss of potential gain.

Economy

A system consisting of the production, trade, distribution, and consumption of goods and services by different agents in a given geographical location.