When Computing the Net Cash Provided by Operating Activities Using

question 43

Multiple Choice

When computing the net cash provided by operating activities using the indirect approach on the statement of cash flows, which item below would NOT be added to net income?

• A)Depreciation.
• B)Loss on the sale of an asset.
• C)Decrease in accounts payable.
• D)Decrease in prepaid expenses.

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Definitions:

Circular-Flow Model

A diagram that traces the flow of resources, products, income, and revenue among economic decision makers.

Households

Individuals or groups of people living together as a single unit, making economic decisions regarding consumption, savings, and labor supply.

Resource Market

A market where resources (like labor, capital, and raw materials) used to produce goods and services are bought and sold.

Macroeconomists

Economists who study broad aggregates and systemic phenomena in the economy, including inflation, total employment, and economic growth.