All of the Following Are Deducted from Net Income When

question 70

Multiple Choice

All of the following are deducted from net income when preparing the statement of cash flows under the indirect method except:

• A) an increase in accounts payableAccounts Payable.
• B) a decrease in Accrued Liabilities.
• C) an increase in accounts receivableAccounts Receivable.
• D) an increase in Iinventory.

---

Definitions:

Significant Sunk Costs

Expenses that have already been incurred and cannot be recovered or changed.

Avoidable Cost

Costs that can be eliminated if a certain decision is made, not incurred if a particular activity is avoided.

Sunk Cost

A sunk cost is an expense that has already been incurred and cannot be recovered, often considered irrelevant for future business decisions.

Opportunity Cost

The cost of the next best alternative foregone as a result of making a decision.