On the Statement of Cash Flows Prepared Using the Direct

question 48

Multiple Choice

On the statement of cash flows prepared using the direct method, cash paid for income taxes would be income tax expense minus

• A) an increase in income taxes payable.
• B) a decrease in income taxes payable.
• C) beginning income taxes payable.
• D) ending income taxes payable.

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Definitions:

Discount Rate

The interest rate used to discount future cash flows of a financial instrument to present value, reflecting the time value of money and investment risk.

Net Present Value

A calculation used to determine the value of an investment by discounting future cash flows to their present value to assess its profitability.

Working Capital

The variation between an organization's immediate assets and its immediate debts, reflecting its short-term fiscal stability and efficiency in operations.

Annual Net Operating Cash Inflows

The total cash that flows into a business from its operational activities over a year, minus cash outflows.