If a Company Uses the Indirect Method to Report Cash

question 9

Multiple Choice

If a company uses the indirect method to report cash flows, it

• A) subtracts any increase in its accrued pension cost from net income.
• B) subtracts any increase in accrued pension cost as an investing activity.
• C) adds any increase in its accrued pension cost to net income.
• D) adds any increase in accrued pension cost as a financing activity.

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Definitions:

Antitrust Sanctions

Penalties imposed on businesses or individuals for violating antitrust laws, intended to promote fair competition and prevent monopolistic practices.

Price Signalling

A mechanism where the price of a good or service provides information to buyers and sellers which influences their decisions.

Cartels

An association of independent firms or countries that agree to coordinate their production and pricing decisions to monopolize a market and maximize collective profits.

Collusive Agreement

A secret or illegal cooperation or conspiracy, especially between competitors, aimed at deceiving or gaining an unfair advantage in the market.