On a Reconciliation of Net Income to Cash from Operations

question 66

Multiple Choice

On a reconciliation of net income to cash from operations, depreciation is treated as an adjustment to net income because depreciation:

• A) is a direct outflow of cash.
• B) reduces net income but does not involve an outflow of cash.
• C) reduces net income and involves an outflow of cash.
• D) is an outflow of cash to a reserve account for replacement of assets.

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Definitions:

F.O.B. Boston

A term indicating that the seller is responsible for goods transportation and risk until the goods are loaded onto a ship in Boston.

Risk Of Loss

Legal term defining which party bears the financial responsibility for damage, destruction, or loss of property, particularly in transactions of goods.

FOB Seattle

A shipping term indicating that the seller's responsibility ends when the goods are placed on board a ship at the Seattle port; the buyer is responsible for freight and risks from that point.

Risk Of Loss

Refers to the legal responsibility regarding who bears the financial burden if goods are damaged or lost during a transaction.