If the Indirect Method Is Used,each of the Following Is

question 122

Multiple Choice

If the indirect method is used,each of the following is a proper adjustment to net income to arrive at net cash flows from operating activities except

• A) adding a decrease in Prepaid Expenses.
• B) deducting an increase in Salaries Payable.
• C) deducting an increase in Accounts Receivable.
• D) adding a decrease in Inventory.

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Definitions:

Budgeted Operating Income

The anticipated revenue from operations minus the expected operating expenses for a certain period, typically before financial expenses and taxes.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, often used in variance analysis.

Variable Costs

Charges that adjust in line with the scale of production or sales figures.

Variable Overhead Efficiency Variances

The difference between the actual variable overhead incurred and the standard cost of variable overhead that should have been incurred based on efficient operations.