Under the Indirect Approach, Adjustments Must Be Made to Net

question 56

Multiple Choice

Under the indirect approach, adjustments must be made to net income in the operations section for all of the following items, EXCEPT

• A) depreciation.
• B) gain on the sale of equipment.
• C) loss on the sale of land.
• D) proceeds for the sale of temporary investments.

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Definitions:

DJIA

An abbreviation for the Dow Jones Industrial Average, a stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States.

Bank Insolvency

A situation where a bank's liabilities exceed its assets, rendering it unable to meet its obligations.

Certificates of Deposit

A savings certificate with a fixed maturity date and specified fixed interest rate that is issued by a bank to a depositor.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with fixed dividends.