Which One of the Following Decreases Net Income but Does

question 60

Multiple Choice

Which one of the following decreases net income but does not affect the operating cash flow of a firm that owes no taxes for the current year?

• A)Indirect cost
• B)Direct cost
• C)Noncash item
• D)Period cost
• E)Variable cost

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Definitions:

Readily Marketable

Items or securities that are readily marketable can be quickly sold in the market without significantly affecting their price.

Operating Cycle

The duration of time it takes for a company to purchase inventory, sell products, and receive cash from sales, representing the full cycle of a business's operations.

Short-Term Investments

Investments typically expected to be converted into cash within one year, such as stocks or bonds.

GAAP

GAAP stands for Generally Accepted Accounting Principles, which are a collection of commonly-followed accounting rules and standards used in the United States for financial reporting.