On the Statement of Cash Flows Prepared by the Indirect

question 140

Multiple Choice

On the statement of cash flows prepared by the indirect method, a $50,000 gain on the sale of investments would be

• A) deducted from net income in converting the net income reported on the income statement to cash flows from operating activities
• B) added to net income in converting the net income reported on the income statement to cash flows from operating activities
• C) added to dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends
• D) deducted from dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends

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Definitions:

Systematic Risk

The inherent risk associated with the entire market or market segment, also known as market risk, which cannot be diversified away.

Market Risk

The risk of losses in investments caused by factors affecting the overall performance of the financial markets, also known as systematic risk.

Economic Outlook

An analysis or forecast of the future economic condition, including expectations for growth, inflation, and employment.

Coefficient of Variation

A statistical measure of the dispersion of data points in a data series around the mean, used to assess the relative risk of an investment.