When Using the Indirect Method to Complete the Cash Flows

question 96

Multiple Choice

When using the indirect method to complete the cash flows from operating activities section of the statement of cash flows, what is the proper disposition of depreciation expense?

• A)Add depreciation expense to net income.
• B)Subtract depreciation expense from net income.
• C)Disregard depreciation expense because it relates to an investing activity.
• D)Disregard depreciation expense because it is a non-cash expense.

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Definitions:

Pure Monopsony

A market condition where there is only one buyer for many sellers, giving the buyer significant power over prices and terms of sale.

Labor Market

The supply and demand for labor, in which employees provide the supply and employers provide the demand.

Employment Opportunities

Job openings available in the economy for individuals seeking employment, reflecting the demand for labor and the health of the economic environment.

Taft-Hartley Act

A U.S. law enacted in 1947 that restricts the activities and power of labor unions.