Using the Indirect Method to Calculate Net Cash Provided (Or

question 107

Multiple Choice

Using the indirect method to calculate net cash provided (or used) by operating activities,which of the following is subtracted from net income?

• A) Depreciation expense.
• B) Amortization of intangible assets.
• C) Decrease in income taxes payable.
• D) Bad debts expense.
• E) None of these answers is correct.

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Definitions:

FOB Destination

A shipping term indicating that the seller bears delivery costs and risks until the goods reach the buyer's specified location.

Perpetual Inventory System

A perpetual inventory system continuously updates the record of inventory with each sale or purchase, providing real-time data on the inventory levels.

Merchandise

Goods procured by a business for the purpose of resale to customers.

Inventory

The total amount of goods and materials held by a company intended for sale or to be used in the production of goods sold.