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:

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB) for global use.

Lower Of Cost Or Market

A method that values inventory at the lower of its historical cost or its current market price.

Price Index

A Price Index measures the average change in prices over time for a basket of goods and services, used to assess inflation or deflation in an economy.