When Reconciling Net Income to Net Cash Provided by Operating

question 123

Multiple Choice

When reconciling net income to net cash provided by operating activities, all of the following would be an appropriate procedure except _____.

• A)adding depreciation expense
• B)subtracting a decrease in accounts payable
• C)subtracting a decrease in prepaid expenses
• D)adding a decrease in inventories

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Definitions:

Myopia

Short-sightedness, either literally in terms of vision or metaphorically in planning or decision-making.

Behavioral Economics

A field of study that analyzes the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions, and the consequences for market prices, returns, and resource allocation.

Time Inconsistency

The tendency of individuals to change their plans about future actions due to a preference for immediate gratification over future benefit, often leading to inconsistency over time.

Precommitment

A strategy or decision made in advance to lock oneself into a set of actions or behaviors, often to avoid temptation or to ensure future goals are met.