Under the Indirect Method, Which of the Following Is NOT

question 43

Multiple Choice

Under the indirect method, which of the following is NOT a proper adjustment to net income to arrive at net cash flow from operations?

• A) Adding a decrease in inventory
• B) Adding an increase in prepaid expense
• C) Adding an increase in salaries payable
• D) All are proper adjustments to net income.

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Definitions:

Underproduce

The act of producing less than is demanded or expected, often leading to shortages and increased prices.

Overprice

The act of charging a price for a product or service that is higher than what is considered fair or reasonable.

Industry Curve

A graphical representation showing how the average costs of production change as the total output of an industry changes.

Private Bargaining

The process of negotiating terms directly between parties without external intervention.