When Adjusting Net Income to Cash Using the Indirect Method

question 70

Short Answer

When adjusting net income to cash using the indirect method describe how each of the following should adjust net income.Added (+),Subtracted (-)or No Adjustment (N
A).
_____ 1.Increases in Accounts Receivable
_____ 2.Gain on Sale of Equipment
_____ 3.Decrease in Accounts Payable
_____ 4.Depreciation Expense
_____ 5.Increase in Land account
_____ 6.Decrease in Inventory
_____ 7.Decrease in Dividend Payable
_____ 8.Increase in Prepaid Insurance
_____ 9.Decrease in Discount on Bonds Payable
_____10.Decrease in Salaries Payable

• A).
• _____ 1.Increases in Accounts Receivable
• _____ 2.Gain on Sale of Equipment
• _____ 3.Decrease in Accounts Payable
• _____ 4.Depreciation Expense
• _____ 5.Increase in Land account
• _____ 6.Decrease in Inventory
• _____ 7.Decrease in Dividend Payable
• _____ 8.Increase in Prepaid Insurance
• _____ 9.Decrease in Discount on Bonds Payable
• _____10.Decrease in Salaries Payable

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Definitions:

Cash Cycle

This term describes the time it takes for a business to convert its investments in inventory and other resources into cash flows from sales.

Source Of Cash

The origin of funds that a company or individual has, which could be operational earnings, investment returns, or financing.

Merchandise Sale

A commercial transaction where goods are sold to consumers.

Long-Term Debt

Long-term debt is loans and financial obligations lasting more than one year, often used for business expansion or large capital investments.