Under the Indirect Method of Preparing the Statement of Cash

question 73

Multiple Choice

Under the indirect method of preparing the statement of cash flows,add backs to net income include all of the following except:

• A) depreciation expense
• B) deferred tax expense
• C) gains on sale of equipment
• D) share-based compensation

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Definitions:

Collateral

Assets pledged by a borrower to secure a loan or other credit, which can be seized by the lender if the borrower fails to pay.

Purchase-Money Security Interest

A legal claim or lien on property that secures payment of the price or an obligation incurred for the property's purchase.

Consumer Good

A good used or bought for use primarily for personal, family, or household purposes.

Financial Statement

A formal record of the financial activities and position of a business, individual, or other entity, typically detailing income, assets, liabilities, and equity at a specific point in time.