Reading 34: Understanding the Cash Flow Statement - LOS g ～ convert, direct, white, style, basis

mayanfang1

Q1. To convert an indirect statement of cash flows to a direct basis, the analyst would:

A)   subtract increases in inventory from cost of goods sold.

B)   add increases in accounts payable to cost of goods sold.

C)   add decreases in accounts receivables to net sales.

Q2. To convert an indirect statement of cash flows to a direct basis, the analyst would:

A)   reduce cost of goods sold by any decreases in accounts payable.

B)   increase cost of goods sold by any depreciation that was included.

C)   reduce cost of goods sold by any decreases in inventory.

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