Question

Which of the following would not be an adjustment to net income using the indirect method? An increase in accounts receivable. A decrease in a prepaid expense. A loss on equipment sold. An increase in accrued wages. An increase in plant, property and equipment.

Answer 1

Answer:

Using the indirect method, an increase in accrued wages is not an adjustment to net income.

Explanation:

An increase in accounts receivable are subtracted from net income.

A decrease in a prepaid expense are added to net income.

A loss on equipment sold are added to net income.

An increase in accrued wages not consider. (Increase in the wages payable balance are added to net income)

An increase in plant, property and equipment.are subtracted from net income.