Assume the Direct Method Is Used to Compute Net Cash

question 19

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 Accounts Payable-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.

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Definitions:

Tort Law

A segment of law that addresses, remedies, and compensates for civil wrongs not arising out of contractual obligations.

Economic Interests

The financial stakes or advantages that individuals or organizations seek to achieve, which influence their decisions and behaviors in economic contexts.

Fraudulent Misrepresentation

A false statement made knowingly, without belief in its truth, or recklessly, with intent to deceive and induce another to act upon it.

Falsely Tells

Communicating untruths or inaccurate information, either knowingly or unintentionally.