Using the Indirect Method, Which of the Following Would Be

question 10

Multiple Choice

Using the indirect method, which of the following would be subtracted from profit?

• A)Depreciation expense
• B)Increase in accounts receivable
• C)Increase in accounts payable
• D)Decrease in prepaid expenses

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Definitions:

Taxable Income

The amount of income that is used to calculate how much tax an individual or a company owes to the government.

GAAP

Generally Accepted Accounting Principles, a common set of accounting rules and standards used in financial reporting.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, essential for assessing financial health.

Audited

The process of officially inspecting an individual's or organization's accounts by an independent body to ensure accuracy and compliance with laws and regulations.