Which of the Following Would Be Subtracted from Profit Using

question 28

Multiple Choice

Which of the following would be subtracted from profit 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:

Proprietorship

A business owned and operated by a single person, making it the simplest form of business ownership.

Business Owned

Refers to entities such as companies or enterprises that are possessed and controlled by one or more persons or other businesses.

Economic Entity Assumption

An accounting principle that treats a business as separate from its owners, allowing for independent financial statements.

Personal Living Expenses

Costs associated with daily living, including food, housing, transportation, and entertainment.