The Comparative Balance Sheets of Friends,Inc

question 161

Multiple Choice

The comparative balance sheets of Friends,Inc.show a net increase in accounts receivable of $650 and a net decrease in inventory of $500.To determine net cash flow from operating activities under the indirect method,net income should be:

• A)Reduced by $650.
• B)Increased by $650.
• C)Reduced by $150.
• D)Increased by $150.

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Definitions:

Market-to-Book Value

A ratio used to compare a company's market value to its book value, indicating how much investors are willing to pay above or below the net asset value.

Financial Statements

Documents that present the financial activities and condition of a business, including the balance sheet, income statement, and cash flow statement.

Stock Market

A public market for the trading of company stocks and securities, facilitating capital growth for listed companies and investment opportunities for individuals.