Asked by
Mauricio Reyna
on Nov 15, 2024Verified
When preparing the statement of cash flows by the indirect method, if current assets have increased, the difference is:
A) added to net income.
B) added to investments.
C) deducted from net income.
D) subtracted from investments.
Current Assets
Assets that are expected to be converted into cash, sold, or consumed within one year or during the normal operation cycle of the business, whichever is longer.
Net Income
Net income is the total profit of a company after all expenses and taxes have been subtracted from total revenue.
Investments
Resources such as money put into buying financial instruments or other assets to gain profitable returns in the form of income, interest, or appreciation of value.
- Inspect the effects various transactions impose on cash flow from operations, under the framework of the indirect method.
- Understand the impact of fluctuations in current assets and current liabilities on cash flow.
Verified Answer
MJ
Learning Objectives
- Inspect the effects various transactions impose on cash flow from operations, under the framework of the indirect method.
- Understand the impact of fluctuations in current assets and current liabilities on cash flow.