Cash Flows from Operating Activities-Indirect Method

question 63

Essay

Cash flows from operating activities-indirect method
In the computation of net cash from operating activities for 2013 by the indirect method, determine whether each of the following items would be added to profit for the year, deducted from profit for the year, or omitted from the computation. Indicate your answer by using the following symbols: + (added to profit for the year), - (deducted from profit for the year), or 0 (omitted from computation).
____ (a) A decrease in accounts payable to suppliers of merchandise during 2013.
____ (b) A loss recognized on the sale of office equipment during 2013.
____ (c) Depreciation expense for 2013.
____ (d) Dividends, declared at the end of last year, paid to shareholders during the current year.
____ (e) An increase in inventory levels during 2013.
____ (f) A decrease in accounts receivable from customers during 2013.

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Definitions:

Fallacy of Composition

The error of assuming that what is true of a part is necessarily true of the whole.

Prosperity

A state of economic well-being characterized by high levels of income, employment, and production.

Depression

A severe and prolonged reduction in economic activity as occurred during the 1930s

Scarce Resources

Natural, human, and capital resources that are limited in supply, which necessitates choices about how they are allocated.