Which One of the Following Is Subtracted from Net Income

question 24

Multiple Choice

Which one of the following is subtracted from net income when using the indirect method to determine cash flows from operations?

• A)Increase in prepaid insurance
• B)Increase in accounts payable
• C)Decrease in accounts receivable
• D)Decrease in prepaid insurance

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Definitions:

Opportunity Cost

Opportunity cost is the cost of foregoing the next best alternative when making a decision, representing the benefits that could have been gained by choosing the alternative option.

Opportunity Cost

The expense associated with not choosing the second-best option when deciding.

Opportunity Cost

The value of the next best alternative foregone as a result of making a decision.

Point E

typically used in the context of graphs, it can represent a specific equilibrium point or any designated point of interest.