Which of the Following Is an Adjustment That Would Need

question 77

Multiple Choice

Which of the following is an adjustment that would need to be made to net income when calculating cash flows from operations under the indirect method?

• A) Subtract amortization expense
• B) subtract gain on sale of subsidiary
• C) add an increase in accounts receivable
• D) add a decrease in accounts payable

---

Definitions:

GAAP Financial Statements

Financial statements prepared following Generally Accepted Accounting Principles, which are a set of rules and standards for financial reporting.

Executive Compensation

The total pay and benefits, including salary, bonuses, and stock options, received by corporate executives for their management services.

Annual Report

A comprehensive report on a company's activities throughout the preceding year, intended to give shareholders and other interested parties information about the company's financial performance.

Accounting-based Incentive Plans

Compensation plans that reward employees based on meeting certain accounting metrics, such as earnings per share or return on assets.