Which of the Following Should Be Added to Net Income

question 125

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) a gain on the sale of land
• B) a decrease in accounts payable
• C) an increase in accrued expenses
• D) dividends paid on common stock

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Definitions:

Fully Depreciated

A state where a fixed asset has reached the end of its useful life and its book value is reduced to scrap value.

Profit Margin

A measure of a company's profitability, calculated by dividing net income by total revenues. It shows how much profit each dollar of sales generates.

Net Income

The total profit or earnings of a company after all expenses, taxes, and costs have been subtracted from total revenue.