Which of the Following Would Not Be an Adjustment to Net

question 15

Multiple Choice

Which of the following would not be an adjustment to net income using the indirect method?

• A) Depreciation Expense
• B) An increase in Prepaid Insurance
• C) Amortization Expense
• D) An increase in Land

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Definitions:

Multiple-Step Income Statement

A multiple-step income statement is a detailed financial report that separates operating revenues and expenses from non-operating ones to calculate net income in several steps or segments.

Other Revenue

Revenue from sources other than the primary operating activity of a business.

FOB Shipping Point

A term used in shipping indicating that the buyer assumes responsibility for the goods and their transportation costs as soon as the goods leave the seller's location.

Freight Costs

Charges associated with the transportation of goods from one location to another, often considered part of inventory costs in accounting.