Which of the Following Would Be Shown as a Deduction

question 29

Multiple Choice

Which of the following would be shown as a deduction from net income when calculating net cash flow from operating activities using the indirect method?

• A)Decrease in Accounts Payable for inventory purchases
• B)Loss on the sale of equipment
• C)Decrease in Accounts Receivable
• D)Increase in salaries payable

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Definitions:

Dividends

Dividends are a portion of a company's earnings that are distributed to its shareholders as a reward for their investment.

Impairment Loss

A charge against earnings representing the amount by which the carrying amount of an asset exceeds its recoverable amount.

Goodwill

An intangible asset that arises when a company acquires another business for more than the fair value of its net tangible and identifiable intangible assets.

Intangible Assets

Non-physical assets that represent a value to a company, such as patents, trademarks, copyrights, and goodwill.