Using the Indirect Method, Which of the Following Would Not

question 83

Multiple Choice

Using the indirect method, which of the following would not be an adjustment to net income?

• A)depreciation expense
• B)an increase in prepaid insurance
• C)an increase in inventories
• D)an increase in Land

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Definitions:

Liability Account

An accounting record that captures obligations or debts a company owes to others, which are expected to be paid in the future.

Expense Account

An account where businesses track costs incurred during operations, often related to employees' business-related expenses.

Chart of Accounts

The Chart of Accounts is a systematic list of all accounts used by an organization, essential for classifying and organizing financial transactions within the general ledger.

Expense Account

An account where costs associated with the operations of a business, such as rent, utilities, and salaries, are recorded.