Which of the Following Would Be Subtracted from Net Income

question 14

Multiple Choice

Which of the following would be subtracted from net income using the indirect method?

• A) an increase in inventories.
• B) loss on sale of investments.
• C) depreciation expense.
• D) a decrease in accounts payable.

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Definitions:

Net Operating Income

Net operating income reflects a company’s financial performance by showing profit calculated from its core business operations, excluding taxes and interest expenses.

Price Reduction

A decrease in the selling price of a product or service, often used as a strategy to increase demand or sales volume.

Traceable Fixed Expense

A fixed cost that can be directly associated with a specific business segment or area, and which would disappear if the segment was eliminated.

Price Reduction

A decrease in the selling price of goods or services, often to increase demand or meet competitor pricing.