Assume the Indirect Method Is Used to Compute Net Cash

question 14

Multiple Choice

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Decrease in Accounts Receivable-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:

Economic Growth

The increase in a country's production of goods and services over time, indicative of a growing economy.

Technology

Implementing scientific insights for real-world applications, chiefly in the field of industry.

Unemployment

The situation where individuals who are able and willing to work cannot find employment.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing between options.