Using the Indirect Method to Calculate the Net Cash Provided

question 88

Multiple Choice

Using the indirect method to calculate the net cash provided (or used) by operating activities,net income is adjusted for:

• A) Gains and losses from investing and financing activities.
• B) Revenues and expenses that did not provide or use cash.
• C) Changes in noncash current assets and current liabilities related to operating activities.
• D) Gains and losses from investing and financing activities and revenues and expenses that did not provide or use cash.
• E) All of these answers are correct.

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Definitions:

Procurement Activity

The process undertaken by businesses to acquire goods or services, including planning, selection, and purchasing, to meet its requirements.

Activity Rate

A measure used in cost accounting to assign overhead costs to products or services, based on the amount of activity (such as machine hours or labor hours) consumed.

Activity Cost Pool

A categorization in cost accounting that aggregates costs incurred for a specific activity, aiding in more accurate product or service costing.

Product Development

The creation of new products or improvements to existing products to meet customer needs or market opportunities.