Asked by Pallavi Shyam on May 04, 2024
Verified
Using the indirect method, which of the following would not be needed to determine net cash provided by operating activities?
A) depreciation expense
B) change in accounts receivable
C) payment of cash dividends
D) change in prepaid expenses
Depreciation Expense
The portion of the cost of a fixed asset deducted from revenue of the period, reflecting the use and wear and tear of the asset.
Cash Dividends
A rephrase: A form of profit-sharing where a corporation distributes a portion of its earnings to shareholders in the form of cash.
- Compute cash flows stemming from operational activities by employing the indirect approach.
Verified Answer
LI
LMFAO InsideMay 09, 2024
Final Answer :
C
Explanation :
Payment of cash dividends is related to financing activities, not operating activities. The indirect method focuses on adjustments to net income for changes in balance sheet accounts that affect cash flows from operations, such as accounts receivable, prepaid expenses, and depreciation expense.
Learning Objectives
- Compute cash flows stemming from operational activities by employing the indirect approach.