When Reconciling Net Income to Net Cash Provided by Operating

question 151

Multiple Choice

When reconciling net income to net cash provided by operating activities, all of the following would be an appropriate procedure except:

• A) adding depreciation expense
• B) adding a decrease in inventories
• C) subtracting a decrease in prepaid expenses
• D) subtracting a decrease in accounts payable

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Definitions:

Tort Liability

Legal responsibility arising from civil wrongs or injuries caused to a person or property, not based on contracts.

Civilized Society

A society marked by the development of social, cultural, and legal institutions that reflect advanced stages of human progress.

Corporations

Legal entities separate from their owners, created under state law, capable of conducting business, owning assets, and incurring liabilities.

Tort Theory

An area of law that deals with civil wrongs and damages caused by one party to another, not arising from contracts.