1) In preparing a statement of cash flows under the indirect method, a decrease

ID: 2483222 • Letter: 1

Question

1) In preparing a statement of cash flows under the indirect method, a decrease in accounts receivable would be reported or included as a(n):

a) Addition to net income in the operating activites section.

b) Deduction from net income in the operating activities section.

c) Financing activity.

d) Investing activity.

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2) In preparing a statement of cash flows under the indirect method, an increase in accounts payable would be reported as a(n):

a) Addition to net income in the operating activities section.

b) Deduction from net income in the operating activites section.

c) Financing activity.

d) Investing activity.

1) In preparing a statement of cash flows under the indirect method, a decrease in accounts receivable would be reported or included as

a) Addition to net income in the operating activites section, since it represent inflow of cash.

2) In preparing a statement of cash flows under the indirect method, an increase in accounts payable would be reported as a(n):

a) Addition to net income in the operating activities section, since it represent inflow of cash.

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