What Is the Net Adjustment to Net Income with Respect

question 129

Multiple Choice

What is the net adjustment to net income with respect to the determination of cash flows from operating activities when inventory increases $100,000 and accounts payable increases $20,000?

• A)An increase of $120,000.
• B)A decrease of $120,000.
• C)An increase of $80,000.
• D)A decrease of $80,000.

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Definitions:

Statement Of Income

A financial report that provides a summary of a company's revenues, expenses, and profits over a specific period of time, often referred to as a profit and loss statement.

Gross Profit

The financial performance metric that subtracts the cost of goods sold from total revenue, reflecting the efficiency of a company in managing its production and supply chain.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from revenue.

Multiple-Step Statement

A Multiple-Step Income Statement presents revenues and expenses through several sections, including operating and non-operating activities, thereby highlighting key components of income and expenditure.