All of the Following Are Deducted from Net Income When

question 126

Multiple Choice

All of the following are deducted from net income when preparing the statement of cash flows under the indirect method except:

• A)an increase in Accounts Payable.
• B)a decrease in Accrued Liabilities.
• C)an increase in Accounts Receivable.
• D)an increase in Inventory.

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Definitions:

Treasury Bills

Treasury Bills are short-term government securities issued at a discount from the face value and redeemed at full face value upon maturity, typically used as a low-risk investment.

Opportunity Cost

The price paid for not selecting the next most favorable choice when deciding.

Market Interest Rates

The prevailing rates at which borrowers can obtain loans and lenders can invest in debt securities, influenced by the overall demand and supply.

Precautionary Motive

The need to hold cash as a safety margin to act as a financial reserve.