Which of the Following Adjustments to Net Income Is Incorrect

question 163

Multiple Choice

Which of the following adjustments to net income is incorrect when using the indirect method for computing cash flows from operating activities?

• A) Deduct depreciation expense from net income.
• B) Add a decrease in inventory to net income.
• C) Deduct an increase in prepaid expenses from net income.
• D) Add an increase in accounts payable to net income.

Understand and calculate depreciation adjustments for Alternative Minimum Tax (AMT) purposes.

Identify the deductibility of rental activity losses under various income scenarios.

Calculate Alternative Minimum Taxable Income (AMTI) incorporating standard deductions, AMT adjustments, and tax preferences.

Evaluate partnership at-risk amounts under different financing scenarios.

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