Which Statement Regarding the Indirect Method Is False

question 39

Multiple Choice

Which statement regarding the indirect method is false?

• A)Depreciation expense is added back to profit.
• B)An increase in trade receivables is added to profit.
• C)An increase in trade payables is added to profit.
• D)An increase in merchandise inventory is subtracted from profit.

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Definitions:

Range

The difference between the highest and lowest values in a set of numbers, indicating the spread or dispersion.

Appropriation

The allocation of funds or resources to specific departments, projects, or purposes, often used in governmental budgeting.

Contingent Liabilities

Potential liabilities that may occur depending on the outcome of a future event.

Financial Statements

Financial statements are formal records that outline the financial activities and conditions of a business, individual, or other entity, typically including the balance sheet, income statement, and statement of cash flows.