Which of the Following Is a Correct Adjustment to Derive

question 62

Multiple Choice

Which of the following is a correct adjustment to derive cash flow from the net income figure for a firm?

• A)subtract an increase in inventory
• B)add an increase in accounts receivable
• C)subtract an increase in income taxes payable
• D)add an increase in capital expenditures

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Definitions:

Linear Demand Function

A mathematical representation of the relationship between the quantity demanded of a good and its price, assuming this relationship is a straight line.

Income Elasticity of Demand

A measure of how the quantity demanded of a good or service changes in response to a change in consumers' income.

Price Elasticity of Supply

An economic measure of how much the quantity supplied of a good changes in response to a change in price.

Equilibrium Values

The set of prices or quantities in a market or economic model where supply equals demand, and no incentive exists for change.