If the Indirect Method Is Used,which of the Following Is

question 52

Multiple Choice

If the indirect method is used,which of the following is a proper adjustment to net income to arrive at net cash flows from operating activities?

• A)deducting a decrease in Prepaid Expenses.
• B)deducting an increase in Salaries Payable.
• C)adding an increase in Accounts Receivable.
• D)adding a decrease in Inventory.

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Definitions:

Spontaneous Financing

Financing that naturally increases as a firm's operating levels increase, typically through trade credits and accruals.

Five Year Bonds

Debt securities issued with a maturity of five years, typically paying interest semi-annually.

Factor Receivables

The financial practice of selling accounts receivable to a third party at a discount to immediately generate cash.

Uncollectible Accounts

Accounts receivable that are recognized as not being collectible, representing losses to the company.