If the indirect method is used,which of the following would be added to net income to arrive at net cash flows from operating activities?
A) Increase in Inventory
B) Depreciation expense
C) Decrease in Accounts Payable
D) Increase in Prepaid Insurance

Question

Quizplus · Accepted Answer

In the indirect method, net income is adjusted for non-cash expenses and changes in current assets and liabilities to arrive at net cash flows from operating activities. Depreciation expense is a non-cash expense that needs to be added back to net income to arrive at net cash flows from operating activities. The other choices would be adjusted based on whether they are an increase or decrease in a current asset or liability.

If the Indirect Method Is Used,which of the Following Would