Which of the Following Is Subtracted from Net Income as an Adjustment

question 82

Multiple Choice

Which of the following is subtracted from net income as an adjustment under the indirect method of preparing the statement of cash flows?

• A)Gain on the sale of land.
• B)Accounts receivable decrease.
• C)Inventory decrease.

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Definitions:

Entry Price

The price at which a security or asset was bought, affecting the calculation of gains and losses for accounting or tax purposes.

Principal Market

The market with the greatest volume and level of activity for the asset.

Active Market

A market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

Non-performance Risk

Non-performance risk is the risk that a counterparty will not fulfil their contractual obligations, affecting the valuation of financial instruments.