Cash Flows from Operating Activities-Indirect Method

question 160

Short Answer

Cash flows from operating activities-indirect method
In the computation of net cash flows from operating activities for 2009 by the indirect method, determine whether each of the following items would be added to net income, deducted from net income, or omitted from the computation. Indicate your answer by using the following symbols: + (added to net income), - (deducted from net income), or 0 (omitted from computation).
____ (a) A decrease in accounts payable to suppliers of merchandise during 2009.
____ (b) A loss recognized on the sale of office equipment during 2009.
____ (c) Depreciation expense for 2009.
____ (d) Dividends, declared at the end of last year, paid to shareholders during the current year.
____ (e) An increase in inventory levels during 2009.
____ (f) A decrease in accounts receivable from customers during 2009.

---

Definitions:

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogeneous products, free entry and exit, and perfect information.

Efficient

The optimal allocation and utilization of resources to achieve the best possible outcome or output.

Excess Capacity

Excess capacity occurs when a firm's actual production is less than its maximum possible output, often indicating underutilized resources or insufficient demand.

Perfect Competition

An economic model describing a market where no buyer or seller has the market power to influence prices, characterized by many participants and free entry and exit.