When Converting Net Income to Net Cash Provided by Operating

question 82

Multiple Choice

When converting net income to net cash provided by operating activities on the statement of cash flows,indirect method,which of the following is NOT added to net income?

• A)gain on sale of land
• B)decrease in inventory
• C)decrease in accounts receivable
• D)depreciation expense

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Definitions:

Price Variances

Differences between the actual prices paid for goods or services and the expected or standard prices.

Quantity Variances

The difference between the expected amount of inputs needed for production and the actual amount used, often analyzed in cost accounting to assess efficiency.

Standard Costs

Predetermined or estimated costs of manufacturing, selling, or performing a service, used as targets and benchmarks against actual costs.

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, based on the standard rate and actual hours worked.