7. In developing the cash flows from operating activities, most companies in the U. S. (Points: 2)
use the direct method.
use the indirect method.
present both the indirect and direct methods in their financial reports.
prepare the operating activities section on the accrual basis.


8. Which of the following would be subtracted from net income using the indirect method? (Points: 2)
Depreciation expense
An increase in accounts receivable
An increase in accounts payable
A decrease in prepaid expenses


9. Which of the following would be added to net income using the indirect method? (Points: 2)
An increase in accounts receivable
An increase in prepaid expenses
Depreciation expense
A decrease in accounts payable


10. A measure that describes the cash remaining from operations after adjustment for capital expenditures and dividends is (Points: 2)
adjusted cash from operations.
cash provided by operations.
free cash flow.
net cash provided by operating activities.

Optional Information:
Level/Year: 2nd year
Subject: Managerial Accounting