Which of the following is not one of the reasons why net income differs from cash flows from operations under the indirect method of calculating cash flows?
A) non-cash items, such as depreciation and amortization
B) changes in working capital accounts
C) gains and losses related to the sale of plant, property and equipment
D) sale or repurchase of capital stock

Question

Quizplus · Accepted Answer

The sale or repurchase of capital stock is reported in the financing section of the cash flow statement and does not affect cash flows from operations, which is where net income differs from cash flows from operations under the indirect method. Non-cash items such as depreciation and amortization and changes in working capital accounts are adjusted for in the indirect method to arrive at cash flows from operations. Gains and losses related to the sale of plant, property, and equipment are also adjusted for in the operating section of the indirect method.

Which of the Following Is Not One of the Reasons