Weymouth Company uses the indirect method to prepare the operating activities section of its statement of cash flows. Indicate whether each of the following statements is true or false.
a)________ Depreciation expense would be subtracted from net income when determining the amount of cash flow from operating activities.b)________ Losses would be added to net income when determining the amount of cash flow from operating activities.c)________ Cash flow from investing activities would be reported the same as if the direct method were used.d)________ The amount of net cash flow from operating activities will be higher than it would be if the direct method were used.e)________ With the indirect method, a decrease in accounts receivable is added to net income in calculating the amount of cash flows from operating activities.

Question

Quizplus · Accepted Answer

b)True c)True d)False e)T. Net cash flow is the same whether the direct or the indirect method is used.e)This is true. A decrease in a noncash current asset, such as accounts receivable, is added to net income.

Weymouth Company Uses the Indirect Method to Prepare the Operating