Using the Indirect Method for Preparing the Statement of Cash

question 50

Multiple Choice

Using the indirect method for preparing the statement of cash flows,which of the following would not be included as an adjustment to net income?

• A)A decrease in Prepaid Insurance.
• B)An increase in Accounts Payable.
• C)An increase in Equipment.
• D)An increase in Accounts Receivable.
• E)None of the answer choices is correct.

---

Definitions:

Par Value

The face value of a bond or a stock as specified by the issuing company, not necessarily related to market value.

Paid-In Capital

Paid-in capital is the amount of money that a company has received from shareholders in exchange for shares of stock, exceeding the par or stated value of the shares.

Retained Earnings

The part of net earnings kept by the company instead of being paid out to its shareholders in the form of dividends.

Stock Dividend

A dividend payment made to shareholders in the form of additional shares, rather than cash, based on the proportion of shares already held.