The Amortization of Patents Should Be Presented in a Statement

question 101

Multiple Choice

The amortization of patents should be presented in a statement of cash flows prepared using the indirect method as a(n)

• A)inflow and outflow of cash.
• B)outflow of cash.
• C)addition to net income in the adjustments to reconcile net income to cash from operating activities.
• D)deduction from net income in the adjustments to reconcile net income to cash from operating activities.
• E)None of these answers is correct.

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Definitions:

Enterprise

A business or company, especially when considered in terms of its entrepreneurial or innovative characteristics.

Vertical Analysis

A financial analysis method where each entry for each of the three major categories of accounts (assets, liabilities, and equities) in a balance sheet is represented as a proportion of the total account.

Comparative Data

Information or data that is compared to similar information from another period, or between different entities, to evaluate performance or make decisions.

Financial Statements

Official records that detail the financial activities and condition of a business, including the balance sheet, income statement, and cash flow statement.