Which of the Following Is Not Reported as an Adjustment

question 7

Multiple Choice

Which of the following is not reported as an adjustment to net income when using the indirect method of computing net cash flows from operating activities?

• A) Cash dividends paid.
• B) A change in accounts receivable.
• C) Depreciation.
• D) A change in a prepaid expense.

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Definitions:

Support Department Costs

The costs associated with functions that assist the direct production or service departments of an organization, such as maintenance and administration.

Overhead Rates

The ratio used to allocate indirect costs to products or services, typically based on a measure such as labor hours or machine hours.

Personnel Costs

Expenses related to the compensation and benefits of employees, including wages, salaries, bonuses, and fringe benefits.

Volume-based Cost Driver

A factor that causes the cost of an activity or resource to increase, directly related to the volume of production or service delivery.