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:

Unidentified Principal

Refers to a situation in agency law where an agent acts on behalf of a principal, but the identity of the principal is not disclosed to the third party.

Actual Authority

The express or implied power granted by a principal to its agent, allowing the agent to perform acts on the principal's behalf, which legally binds the principal with third parties.

Apparent Authority

The appearance or assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

Doctrine of Estoppel

A legal principle that prevents a person from asserting something contrary to what is implied by a previous action or statement by them, or by a previous relevant judicial determination.