If the Indirect Method Is Used,which of the Following Would

question 73

Multiple Choice

If the indirect method is used,which of the following would be added to net income to arrive at net cash flows from operating activities?

• A)Increase in Inventory.
• B)Decrease in Prepaid Expenses.
• C)Decrease in Accounts Payable.
• D)Increase in Accounts Receivable.

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Definitions:

Ordinary Business Income

Income earned from the normal business operations, subject to regular tax rates.

Subchapter S

A section of the Internal Revenue Code that allows corporations to pass income directly to shareholders and avoid double taxation while retaining the benefits of corporate structure.

Schedule K-1

A tax form used to report a beneficiary's share of income, deductions, and credits from a partnership, S corporation, or trust.

Charitable Contributions

Money or goods donated to nonprofit or charitable organizations, often eligible for tax deductions.