Under the Indirect Method, Which of the Following Is NOT

question 47

Multiple Choice

Under the indirect method, which of the following is NOT a proper adjustment to net income under operating activities?

• A) Adding a decrease in inventory
• B) Subtracting an increase in salaries payable
• C) Deducting an increase in prepaid expenses
• D) Subtracting a gain on the sale of equipment
• E) Adding a decrease in accounts receivable

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Definitions:

Acute Illnesses

Short-term medical conditions that come on rapidly and have specific symptoms or effects.

Chronic Illnesses

Long-term health conditions that are persistent and usually require ongoing management, such as diabetes or heart disease.

Morbidity

The condition of being diseased or the incidence rate of disease in a population.

Health

The state of complete physical, mental, and social well-being, not merely the absence of disease or infirmity.