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:

Cancellation

Cancellation refers to the act of terminating or ending a contract, an agreement, or a service before it is completed or takes effect.

Initial Investment

The amount of money used to start a project, purchase an asset, or initiate an investment.

Capital

Financial assets or resources that individuals, companies, or governments use to fund their operations or invest.

Profits

The financial gain realized when the revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain the activity.