Which of the Following Is an Incorrect Statement of One

question 39

Multiple Choice

Which of the following is an incorrect statement of one of the rules for converting net income to the cash flow from operating activities using the indirect method?

• A)Increases in current assets are subtracted from net income.
• B)Decreases in current assets are added to net income.
• C)Gains are added to net income.
• D)Increases in current liabilities are added to net income.

---

Definitions:

Legal Capital

The portion of a company's equity that cannot legally be distributed to the shareholders as dividends, typically the par value of issued shares.

Corporate Creditors

Individuals or institutions owed money by a corporation, typically as a result of lending money or providing goods and services on credit.

IFRS

International Financial Reporting Standards are accounting guidelines created by the International Accounting Standards Board, increasingly adopted worldwide for drafting financial statements of public companies.

Reserves

Funds set aside by a company to cover future obligations, losses, or unforeseen expenses.