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:

Bargaining Unit

A group of employees with a clear and identifiable community of interests who are represented by a union in negotiations and labor discussions.

Reinstatement

The act of restoring someone or something to their previous position, status, or conditions, often used in employment or insurance contexts.

Compulsory Arbitration

A mandatory arbitration process enforced by law or contract, requiring parties to resolve their dispute through arbitration rather than through litigation in court.

Essential Services

Services deemed crucial to the public welfare, including healthcare, utilities, and emergency services, which are often protected by law during strikes or disputes.