Which of the Following Is a Correct Statement of One

question 36

Multiple Choice

Which of the following is a correct statement of one of the rules for converting net income to the cash flow from operating activities using the indirect method?

• A)Increases in current liabilities are added to net income.
• B)All non-cash expenses and losses are subtracted from net income.
• C)Increases in current assets are added to net income.
• D)Decreases in current assets are subtracted from net income.

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Definitions:

Consolidated Income Tax Return

A single income tax return filed by a parent company on behalf of itself and its subsidiaries, consolidating their income and taxes as one entity.

Domestic Corporations

Domestic corporations are businesses that are registered, incorporated, or formed within a specific country and operate under its laws.

Ownership

The state or fact of owning something, which includes the rights to use, sell, or receive income from it.

Deferred Income Tax Asset

A financial item on the balance sheet that results from over-payment or advance payment of taxes, which is expected to be recovered in future periods.