Which of the Following Would Be Deducted from Net Income

question 6

Multiple Choice

Which of the following would be deducted from net income when determining cash flows from operating activities under the indirect method?

• A)An increase in accounts payable.
• B)Depreciation expense.
• C)A decrease in prepaid insurance.
• D)A gain on the sale of a depreciable asset.

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Definitions:

Open-market Operations

Central bank activities involving the buying and selling of government securities in the open market to control the money supply and interest rates.

U.S. Government Securities

Financial instruments issued by the United States Department of the Treasury to fund federal government spending.

Federal Open Market Committee

The branch of the Federal Reserve System responsible for setting monetary policy, including the manipulation of interest rates and the money supply.

Federal Reserve Banks

The regional banks that make up the Federal Reserve System, the central banking system of the United States, responsible for implementing monetary policy, supervising and regulating banks, and providing financial services.