Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?
A) An increase in inventory
B) A decrease in accounts payable
C) Preferred dividends declared and paid
D) A decrease in accounts receivable

Question

Quizplus · Accepted Answer

An increase in inventory and preferred dividends declared and paid would be subtracted from net income, while a decrease in accounts payable would be added back to net income. However, a decrease in accounts receivable would be added back to net income as it represents cash that has been collected.

Which of the Following Should Be Added to Net Income