When Preparing a Statement of Cash Flows Using the Indirect

question 131

Multiple Choice

When preparing a statement of cash flows using the indirect method,each of the following should be classified as an operating cash flow except:

• A)An increase in accounts receivable.
• B)A decrease in accounts payable.
• C)Proceeds from the disposal of a long-term asset with no gain or loss.
• D)An increase in prepaid expenses.
• E)A decrease in accrued expenses payable.

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Definitions:

Unequivocal

Leaving no doubt; clear, unambiguous, and without any possibility of misunderstanding.

Acceptance

The act of agreeing to receive or undertake something offered.

Notification

The act of formally informing or giving notice to a party or authority about an event, action, or proceeding.

Automatically Terminate

The ending of an agreement, contract, or employment without the need for action by either party, often triggered by predetermined conditions.