Which of the Following Adjustments to Net Income Is NOT

question 4

Multiple Choice

Which of the following adjustments to net income is NOT correct if you are trying to calculate cash flow from operating activities?

• A)Add increases in accounts payable
• B)Add back depreciation
• C)Add increases in accounts receivable
• D)Deduct increases in inventory

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Definitions:

Associate

A company in which another company owns a significant stake, typically between 20% and 50%, allowing some degree of influence without full control.

Significant Influence

The power to participate in the financial and operating policy decisions of another entity, but not control those policies.

Share Ownership

Denotes holding equity in a company, representing a claim on part of the company's assets and earnings.

Policy Decision Making

The process by which governments or organizations establish rules, directives, and guidelines to influence and determine present and future decisions.