In Computing Net Cash Provided by Operating Activities Using the Indirect

question 4

Multiple Choice

In computing Net cash provided by operating activities using the indirect method, each of the following is added to net income EXCEPT:

• A)an increase in accrued expenses payable.
• B)a gain on sale of equipment.
• C)depreciation expense.
• D)a decrease in inventory.

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Definitions:

Debt-to-Equity Ratio

A measure of a company's financial leverage indicating the proportion of company financing from debt compared to equity.

Balance Sheet

A Balance Sheet is a financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Corporation

A legal entity owned by shareholders, offering limited liability and existing independently of its owners.

Times Interest Earned

A financial metric indicating how many times a company's operating income can cover its interest expense, used to assess financial stability.