In Preparing a Statement of Cash Flows Under the Indirect

question 103

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:

Market Values

The current price at which an asset or service can be bought or sold in a competitive marketplace.

Unrealized Holding Gain

A profit that exists on paper resulting from an investment that has increased in value but has not yet been sold.

Trading Securities

Securities that a company holds with the intent to sell them in the short term to profit from price changes.

Income Statement

A financial report that shows a company's revenues, expenses, and profits or losses over a specific period, providing insight into operational performance.