Which of the following is a deduction from net income when using the indirect approach to prepare the cash from operating activities of the Statement of Cash Flows?
A) increase in accounts payable
B) decrease in prepaid expenses
C) loss on sale of investments
D) depreciation expense

Question

Quizplus · Accepted Answer

A decrease in prepaid expenses is deducted from net income because it indicates that cash was used to pay for expenses in advance, reducing cash flow.

Which of the Following Is a Deduction from Net Income