When Preparing the Statement of Cash Flows Using the Indirect

question 22

Multiple Choice

When preparing the statement of cash flows using the indirect method,the payment of dividends would appear as:

• A) a decrease in the operating activities section
• B) an increase in the operating activities section
• C) a use of cash in the financing activities section
• D) a source of cash in the financing activities section

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Definitions:

Liabilities

Financial obligations or debts owed by a business to outsiders, which are required to be settled in the future.

Drawing

A withdrawal made by an owner from the business for personal use.

Revenues

Income generated from normal business operations and includes discounts and deductions for returned merchandise.

Owner's Equity

The residual interest in the assets of the entity after deducting liabilities, representing the ownership stake of the owners.