Which of the Following Would Be Subtracted from Net Income

question 75

Multiple Choice

Which of the following would be subtracted from net income when using the indirect method to derive net cash flows from operating activities?

• A) Decrease in salaries and wages payable
• B) Loss on sale of investments
• C) Decrease in net accounts receivable
• D) Depreciation expense

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Definitions:

Fair Value

The estimated market value of an asset or liability, based on current market conditions rather than historical cost.

Trading Securities

Financial assets such as stocks or bonds, bought and held primarily for the purpose of selling them in the near term to realize short-term gains.

Fair Value

An estimate of the market value of an asset or liability, reflecting the amount for which it could be exchanged or settled between knowledgeable, willing parties in an arm's length transaction.

Retained Earnings

Profits that a company has reinvested into the business rather than distributing to shareholders as dividends.