Which of the Following Is a Deduction from Net Income

question 11

Multiple Choice

Which of the following is a deduction from net income when using the indirect approach to prepare the cash from operations section of the cash flow statement?

• A)Increase in accounts payable
• B)Decrease in prepaid expenses
• C)Gain on sale of investments
• D)Amortization expense

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Definitions:

Mental Ability

The capacity to perform cognitive tasks, reason, solve problems, and adapt to new situations.

Understand Obligations

Recognizing and comprehending the duties and responsibilities that are part of an agreement or contract.

Capacity

The legal ability or competency of a person or entity to enter into binding contracts or perform certain acts.

Illegal Clause

A provision in a contract that is prohibited by law and therefore unenforceable.