Using the Indirect Method, Where Does the Decrease in Accounts

question 31

Multiple Choice

Using the indirect method, where does the decrease in accounts payable appear in a consolidated statement of cash flows?

• A) $7,000 increase to net income as an operating activity.
• B) $7,000 decrease to net income as an operating activity.
• C) $5,600 increase to net income as an operating activity.
• D) $5,600 decrease to net income as an operating activity.
• E) $7,000 increase as a financing activity.

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Definitions:

Approximated

Brought closer together or made to correspond or resemble more closely, often used in reference to making estimates or calculations that are close to the actual values.

Inflammatory Phase

The initial phase of wound healing in which bleeding is reduced as blood vessels in the affected area constrict.

Scar Tissue

Fibrous tissue that replaces normal skin after an injury or surgery, often resulting in a mark or area of skin that's differently textured.

Blood Vessels

Tubes in the body through which blood flows, including arteries, veins, and capillaries, that transport nutrients and oxygen to tissues and remove waste products.