In a statement of cash flows prepared by the indirect method, which of the following events would be deducted from net income?
A) increase in accrued pension cost
B) loss on the sale of an available-for-sale investment
C) proceeds from the sale of plant assets
D) amortization expense on a patent

Question

Quizplus · Accepted Answer

An increase in accrued pension cost represents an increase in a liability, which means cash has not yet been paid out. Therefore, it is deducted from net income in the operating activities section of the cash flow statement.

In a Statement of Cash Flows Prepared by the Indirect