To Avoid Understating the Amount of Cash Flow from Operations

question 119

Multiple Choice

To avoid understating the amount of cash flow from operations, the accountant

• A)subtracts the loss from net income.
• B)adds back the loss to retained earnings.
• C)adds back the loss to net income.
• D)subtracts the loss from retained earnings.
• E)none of the above

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Definitions:

Income

Earnings received by an individual or entity, usually in the form of wages, salaries, or investments.

Interest Rate

The percentage of a loan charged to the borrower as interest, usually shown as an annual rate of the outstanding loan amount.

Utility Function

A mathematical representation in economics of a consumer's preference ordering over a set of goods and services.

Consumption

The process by which goods and services are used up or consumed by individuals or groups.