Under the Indirect Method,which of the Following Items Would Be

question 51

Multiple Choice

Under the indirect method,which of the following items would be subtracted from net income to determine the cash flow from operating activities?

• A) Loss on the sale of equipment.
• B) Increase in the balance of accounts receivableAccounts Receivable.
• C) Increase in Aaccrued Iinterest payablePayable.
• D) Depreciation expense.

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Definitions:

Advertising Expense

Costs incurred in promoting products or services, typically considered operating expenses.

Period Cost

Expenses that are incurred during a specific time period but are not directly tied to the manufacturing process, such as selling, general, and administrative expenses.

Owners' Equity

The residual interest in the assets of a company after deducting liabilities, representing the owners' claim on the business.

Balance Sheet Valuations

The process of determining the value of assets, liabilities, and equity as they are presented on a company's balance sheet at a specific point in time.