The Comparative Statements of Financial Position of Friends, Inc

question 105

Multiple Choice

The comparative statements of financial position of Friends, Inc. show a net increase in accounts receivable of $650 and a net decrease in inventory of $500. To determine net cash from operating activities under the indirect method, profit for the year should be:

• A) Reduced by $650.
• B) Increased by $650.
• C) Reduced by $150.
• D) Increased by $150.

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Definitions:

WACC

A formula called the Weighted Average Cost of Capital computes the cost of capital for a business by assigning proportional weights to different capital categories.

Stock Market

A public market for buying, selling, and issuance of stocks of publicly held companies, facilitating equity investment and ownership.

Value

The economic worth of a good, service, asset, or company based on the benefits or returns it provides.

Pre-Tax Cost

The expense associated with purchasing or investing before any taxes are applied.