Assume the Indirect Method Is Used to Compute Net Cash

question 7

Multiple Choice

Assume the indirect method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Interest Expense (assume that cash payments are equal to amount reported) -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:

Methoxyethane

An organic compound with the formula C3H8O; an ether that is used as a solvent.

Condensed Structural Formula

A method of displaying the molecular structure of a chemical compound, showing how its atoms are connected with minimal branching or levels of separation.

Methoxymethane

Another name for dimethyl ether, a colorless gas used as an aerosol propellant and a refrigerant.

Ethoxymethane

A chemical compound also known as diethyl ether, characterized as a highly volatile and flammable liquid used as a solvent and anesthetic.