Which of the Following Adjustments to Net Income Is Correct

question 174

Multiple Choice

Which of the following adjustments to net income is correct when using the indirect method for computing cash flows from operating activities?

• A) Subtract losses from sales of securities.
• B) Add an increase in accounts receivable.
• C) Subtract gains from sales of equipment.
• D) Deduct an increase in accounts payable.

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Definitions:

Form Utility

is the value added to products through the creation of features and function that make them more desirable to consumers.

Product Availability

The degree to which a product can be readily acquired by customers, often a critical factor in customer satisfaction and retention.

Specialization

The process of focusing efforts and resources on a narrowly defined area of expertise or activity, often resulting in increased efficiency and quality.

Market Concentration

The degree to which a small number of firms control the majority of market share in an industry.