Under the Indirect Method of Cash Flow, Which of the Following

question 116

Multiple Choice

Under the indirect method of cash flow, which of the following adjustments would NOT be made to net income when computing cash from operating activities?

• A)Add an increase in Accounts Payable
• B)Add Depreciation Expense
• C)Add a decrease in Accounts Payable
• D)Subtract the gain on sale of land

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Definitions:

Cost of Equity

The return that investors expect for investing in a company's equity, reflecting the risk associated with holding the company's stocks.

Unlever

The process of reducing or eliminating debt from a company's balance sheet, often aiming to improve financial stability.

Loan Out

The process where an individual or company provides services through a third-party entity to minimize liability and often to gain tax efficiencies.

Repurchase Shares

The buying back of a company's own shares from the marketplace, which can increase shareholder value by reducing the number of outstanding shares.