Which of the following items is deducted from net income to arrive at cash flow from operations when using the indirect method?
A)Depreciation expense
B)Amortization expense
C)Decrease in accounts receivable
D)Decrease in accounts payable

Question

Quizplus · Accepted Answer

Decrease in accounts payable is deducted from net income to arrive at cash flow from operations when using the indirect method because it represents a cash outflow that was not captured in the net income calculation. Depreciation and amortization expenses are added back to net income, and a decrease in accounts receivable would be added to net income in the indirect method.

Which of the Following Items Is Deducted from Net Income