If the Indirect Method Is Used to Prepare a Statement

question 105

Multiple Choice

If the indirect method is used to prepare a statement of cash flows,which of the following would be added to net income to arrive at net cash flows from operating activities?

• A)Decrease in accrued liabilities.
• B)Decrease in income taxes payable.
• C)Decrease in accounts receivable.
• D)Increase in prepaid expenses.

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Definitions:

Full Income

The total earnings, including all sources of income and gains, not just wages from employment.

Dividend Income

Income received from owning shares of a company, typically paid out from the company's profits to shareholders at regular intervals.

Nonlabor Income

Income received from sources other than employment or the active exertion of effort, such as dividends, interest, or rental income.

Leisure

Time free from work or duties, which can be used for rest, recreation, or other personal activities.