Which of the following items is subtracted from net income when using the indirect method of calculating cash flows provided by operating activities?
A)A gain on the sale of equipment
B)Repayment of notes payable
C)Receipt of cash dividends
D)Declaration of cash dividends

Question

Quizplus · Accepted Answer

A gain on the sale of equipment is added to net income when using the indirect method, so it must be subtracted in order to arrive at cash flows provided by operating activities. Repayment of notes payable, receipt of cash dividends, and declaration of cash dividends are not adjustments made when using the indirect method for operating activities.

Which of the Following Items Is Subtracted from Net Income