Which One of the Following Is Added to Net Income

question 86

Multiple Choice

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

• A)Increase in inventory
• B)Decrease in wages payable
• C)Loss from sale of land
• D)Gain from selling treasury stock above its original cost

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Definitions:

Liability

A legal obligation or responsibility; it can refer to financial debt or other forms of legal responsibilities individuals or entities may have towards others.

Guarantee

A legal promise to ensure the fulfillment of an obligation or repayment of a loan in case the original party fails to do so.

Terminate

Refers to the action of bringing something or an agreement to an end before its natural conclusion.

Cancellation

The act of crossing out a writing. The operation of destroying a written instrument.