Assume the Direct Method Is Used to Compute Net Cash

question 26

Multiple Choice

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

• A)Add to Cost of Goods Sold to compute cash payments for purchases.
• B)Subtract from Cost of Goods Sold to compute cash payments for purchases.
• C)Not used to adjust Cost of Goods Sold to compute cash payments for purchases.

---

Definitions:

Imposes

To enforce or apply an authority or rule upon others, often without their consent.

Manipulate

To handle or control something, often in a skilled manner, but can also imply influencing or managing people or situations in an unfair or deceitful way.

Position

The location or arrangement of something or someone in relation to its surroundings or another entity.

Coworker's Attitude

The behavior or outlook a colleague demonstrates in a workplace environment.