Starting with Net Income and Adjusting It for Items That

question 117

Multiple Choice

Starting with net income and adjusting it for items that affected reported net income but which did not affect cash is called the

• A) direct method.
• B) indirect method.
• C) working capital method.
• D) cost-benefit method.

---

Definitions:

Available-for-sale Securities

Financial assets not classified as held-to-maturity or trading securities, which can be sold in response to liquidity needs or changes in interest rates.

Common Stock

A type of security that represents ownership in a corporation, granting holders voting rights and a share in the company's profits via dividends.

Accounting Record

Documented evidence of financial transactions, used to track, report, and audit financial movements.

Short-term Speculation

The practice of buying and selling securities, commodities, or other financial instruments with the aim of profiting from price fluctuations over a short period.