Assume the Direct Method Is Used to Compute Net Cash

question 23

Multiple Choice

Assume the direct method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Increase in Prepaid Expenses-indicate the effect on cash payments for operating expenses by choosing one of the following:

• A)Add to operating expenses to arrive at cash payments for operating expenses.
• B)Subtract from operating expenses to arrive at cash payments for operating expenses.
• C)Not used to adjust operating expenses to arrive ay cash payments for operating expenses.

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Definitions:

Consumption Per Person

Consumption per person measures the amount of goods and services consumed, on average, by each person within a population.

Replacement Rate

The proportion of a person's pre-retirement income that is paid out by a pension program upon retirement.

Birthrate

The number of live births per thousand of the population in a specified area or time period.

Population

The total number of individuals or organisms of a particular species living within a specific area or region.