Which of the Following Should Be Added to Net Income

question 69

Multiple Choice

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

• A) a gain on the sale of land
• B) a decrease in accounts payable
• C) an increase in accrued liabilities
• D) dividends paid on common stock

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Definitions:

Net Income

The total profit of a company after all expenses, including taxes and costs, have been deducted from total revenue.

Equity Method

The equity method is an accounting technique used to assess the investments in other companies, where the investment is recorded at original cost and adjusted according to the investor’s share of the investee's profit or loss.

Intra-entity Inventory

Transactions involving the exchange of goods between divisions within the same company, often for consolidation or reallocation purposes.

Gross Profit

The disparity between sales income and the expense of goods sold, prior to considering additional expenditures.