Identify Which of the Following Adjustments to After- Tax Operating

question 100

Multiple Choice

Identify which of the following adjustments to after- tax operating income is used to approximate cash income.

• A) expensing research and development costs
• B) using taxes paid rather than tax expense
• C) using LIFO valuation
• D) deducting interest payable

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Definitions:

Profitability Measure

A financial metric used to assess a business's ability to generate earnings compared to its expenses and other relevant costs incurred during a specific period of time.

Common Stockholder's Equity

This represents the ownership interest of common shareholders in a company, calculated as total assets minus total liabilities and preferred stock equity.

Net Income

A company's remaining income after deducting all expenses and taxes from its revenue.

Accounts Receivable Turnover

Accounts receivable turnover is a financial ratio that measures how effectively a company is collecting on its credit sales by comparing net credit sales with the average accounts receivable for a period.