Asked by Football news With Scott and Lucas on Jun 25, 2024
Verified
Which of the following statements are false when using the indirect method?
A) A loss on the sale of equipment is added to net income in calculating cash provided by operating activities.
B) An increase in accounts receivable during a period is deducted from net income in calculating cash provided by operating activities.
C) An increase in accounts payable during a period is added to net income in calculating cash provided by operating activities.
D) A decrease in accumulated depreciation during a period is added to net income in calculating cash provided by operating activities.
Loss on Sale
A situation where the proceeds from selling an asset are less than its book value, resulting in a financial loss for the entity.
Accounts Receivable
Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.
Operating Activities
Activities related to the core business functions of a company, such as selling goods or services and managing expenses.
- Gain insight into the variances and commonalities in how cash flows from operating activities are detailed using direct versus indirect methods.
- Understand the adjustments necessary in transitioning from accrual to cash basis in the operating section.
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Learning Objectives
- Gain insight into the variances and commonalities in how cash flows from operating activities are detailed using direct versus indirect methods.
- Understand the adjustments necessary in transitioning from accrual to cash basis in the operating section.
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