Which of the Following Adjustments to Convert Net Income to Net

question 1

Short Answer

Which of the following adjustments to convert net income to net cash provided by operating activities is incorrect? $\begin{array}{lll}&&&&&&&&&&\text { Add to Net Income}&\text { Deduct from Net Income}\\\end{array}$
A) $\begin{array}{lll}\text { Accounts Receivable } && \text {decrease } &&&& \text { increase } \\\end{array}$
B) $\begin{array}{lll}\text { Prepaid Expenses } &&& \text { increase } &&&& \text { decrease } \\\end{array}$
C) $\begin{array}{lll}\text { Inventory } &&&&&& \text { decrease }&&& & \text { increase } \\\end{array}$
D) $\begin{array}{lll}\text { Accounts Payable } &&& \text {increase } &&&& \text { decrease }\end{array}$

• A)\(\begin{array}{lll}
• \text { Accounts Receivable } && \text {decrease } &&&& \text { increase } \\\end{array}\)
• B)\(\begin{array}{lll}\text { Prepaid Expenses } &&& \text { increase } &&&& \text { decrease } \\\end{array}\)
• C)\(\begin{array}{lll}\text { Inventory } &&&&&& \text { decrease }&&& & \text { increase } \\\end{array}\)
• D)\(\begin{array}{lll}\text { Accounts Payable } &&& \text {increase } &&&& \text { decrease }
• \end{array}\)

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Definitions:

Percentage of Profits

A portion or share of the profits generated by a business or investment, expressed as a percentage of the total profits.

Loan Repayment

The process of paying back borrowed money, typically in installments, to the lender.

Written Partnership Agreement

A legally binding document that outlines the terms, conditions, and operations of a partnership between two or more parties.

Formal Agreement

A legally binding contract, often documented and signed, that outlines specific terms and conditions agreed upon by parties.