Answer :
The change in Accounts Receivable is added to net income; The change in Inventory is added to net income.
What is net income?
Net income (NI), also known as net profits, is calculated by deducting sales from cost of goods sold, selling, general and administration costs, operating expenses, depreciation, interest, taxes, and other expenses. This number can be used by investors to gauge how much a company's revenue exceeds its expenses. This number, which serves as a gauge of a business' profitability, may be seen on the income statement.
Net income is used by businesses to calculate their earnings per share. Net income is usually referred to as the bottom line by business analysts since it is the figure at the bottom of the income statement. Analysts in the UK call NI profit attributable to shareholders.
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