When Preparing a Reconciliation of Net Income to Cash from Operations

question 43

Multiple Choice

When preparing a reconciliation of net income to cash from operations, an increase in the ending inventory over the beginning inventory will result in an adjustment to reported net income because:

• A) Cash is increased because inventory is a current asset.
• B) Inventory is an expense deducted in computing net earnings, but is not a use of cash.
• C) The net increase in inventory is part of the difference between cost of goods sold and cash paid to suppliers.
• D) All changes in noncash accounts must be disclosed.

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Definitions:

Organizational Stories

Are narratives shared among members of an organization that embody its values, history, and culture.

Performance Standards

The expected levels of performance that set the benchmarks for quality or success in work tasks or goals.

Organizational Culture

The shared values, beliefs, and practices that shape the behavior and attitudes of individuals within an organization, influencing its functioning and performance.

Social Control

Mechanisms, strategies, and structures within a society or group to regulate individual behavior and maintain social order.