In Preparing a Statement of Cash Flows Under the Indirect

question 72

Multiple Choice

In preparing a statement of cash flows under the indirect method, a decrease in accounts receivable would be reported or included as a(n) :

• A) Addition to net income in the operating activities section.
• B) Deduction from net income in the operating activities section.
• C) Financing activity.
• D) Investing activity.

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Definitions:

Deductible

The amount paid out of pocket by the policyholder before an insurance provider pays any expenses.

Premium

An amount paid that is above the standard price or rate for an enhanced feature, service, or higher priority.

Insurance Companies

Financial institutions that provide coverage against specific losses in exchange for premiums.

Signaling

Taking some action to establish credibility despite possessing private information; a way to reduce adverse selection.