Using the indirect method, which of the following would not be an adjustment to profit?
A)Depreciation Expense
B)An increase in Prepaid Insurance
C)An increase in Inventories
D)An increase in Land

Question

Quizplus · Accepted Answer

An increase in Land would not be an adjustment to profit as it is a long-term asset and its value does not decrease over time. Therefore, there is no depreciation expense associated with land, and it does not affect the profitability of the business in the short term.

Using the Indirect Method, Which of the Following Would Not