Which of the Following Should Be Added to Net Income

question 48

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) An increase in inventory
• B) A decrease in accounts payable
• C) Preferred dividends declared and paid
• D) A decrease in accounts receivable

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Definitions:

Direct Labor Hours

The total number of working hours spent by employees directly involved in the production of goods or services.

Machine Hours

A measure of the amount of time a machine is operated, used in manufacturing to allocate costs to products based on machine usage.

Hooded Jacket

A type of apparel that includes a hood attached to it, often used for casual wear or protection against weather.

Departmental Overhead Rate

A calculation used to allocate overhead costs to specific departments, based on varying bases such as labor hours or machine hours.