Which of the Following Would Be Subtracted from Net Income

question 190

Multiple Choice

Which of the following would be subtracted from net income using the indirect method?

• A) Depreciation expense
• B) An increase in accounts receivable
• C) An increase in accounts payable
• D) A decrease in prepaid expenses

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Definitions:

Dividends

Disbursements from profits made by a corporation to its shareholders.

Interest Expense

The cost incurred by an entity for borrowed funds, which is considered an operating expense.

Net Capital Spending

This term refers to the total amount a company spends on acquiring or maintaining fixed assets, minus any sales of these assets, over a given period.

Earnings Per Share

A financial metric that measures the amount of a company's profit attributable to each outstanding share of common stock, calculated as net income divided by the number of outstanding shares.