Which of the Following Adjustments to Convert Net Income to Net

question 17

Multiple Choice

Which of the following adjustments to convert net income to net cash provided by operating activities is correct? $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Add to Net Income $\quad$ Deduct from Net Income

• A) \(\quad \)Accounts Receivable \(\quad \) \(\quad \) increase \(\quad \)\(\quad \) decrease
• B) \(\quad \) Prepaid Expenses \(\quad \) \(\quad \) increase \(\quad \)\(\quad \) \(\quad \) decrease
• C) \(\quad \) Inventory \(\quad \) \(\quad \) \(\quad \) \(\quad \) decrease\(\quad \) \(\quad \) \(\quad \) increase
• D) \(\quad \) Taxes Payable \(\quad \) \(\quad \) \(\quad \) decrease \(\quad \) \(\quad \) \(\quad \) increase

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Definitions:

Gross Profit

The difference between sales revenue and the cost of goods sold, indicating the efficiency of a company's core operations.

Direct Departmental Expenses

Costs that can be directly attributed to a specific department within an organization, such as salaries of departmental staff.

Indirect Expenses

Expenses that are not directly tied to the production of goods or services, such as administrative and marketing costs.

Contribution Margin

The amount remaining from sales revenue after variable costs are deducted, contributing to covering fixed costs and generating profit.