Which of the Following Is a Way That the Operating

question 57

Multiple Choice

Which of the following is a way that the operating activity section of the statement of cash flows adjusts Net Income from the balance sheet?

• A) It subtracts all expenses and costs related to a firm's operating activities.
• B) It adds all non-cash entries related to a firm's operating activities.
• C) It adds the cash that flows from investors to a firm.
• D) It removes the cash used for investment purposes.

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Definitions:

Installment Note

A debt instrument that requires a series of periodic payments of both principal and interest until the debt is paid in full.

Journal Entry

A record in the books of accounts that documents a financial transaction, showing the debit and credit effects.

Interest Expense

Costs incurred by an entity for borrowed funds, which are typically reported on the income statement within the financing or operating sections.

Notes Payable

A written promise to pay a specified amount of money, typically with interest, by a certain date, recorded as a liability on the balance sheet.