Which of the Following Should Be Added to Net Income

question 27

Multiple Choice

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?

• A) an increase in inventory
• B) a decrease in accounts payable
• C) preferred dividends declared and paid
• D) a decrease in accounts receivable

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Definitions:

Revocation Of Acceptance

The legal act of rejecting goods or services and cancelling a contract after initially accepting them, typically due to non-conformity or defects.

Perishable Goods

Items that deteriorate over time or have a limited shelf life and require special handling, like food and flowers.

Decline In Value

A decrease in the market worth of an asset or investment over time.

Merchant Buyer

A business entity that purchases goods in the course of business from suppliers to resell them to the final consumer.