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Indicate Whether Each Item Should Be Added to or Subtracted

Question 62

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indicate whether each item should be added to or subtracted from net income to arrive at the net cash flow from operating activities.

Premises:
Increase in inventory
Amortization of discount on investment in bonds
Decrease in accounts payable
Amortization of discount on bonds payable
Increase in salaries payable
Increase in prepaid expenses
Subsidiary loss under the equity method
Gain on disposal of equipment
Decrease in accounts receivable
Increase in deferred tax liability
Responses:
+
-

Correct Answer:

Increase in inventory
Amortization of discount on investment in bonds
Decrease in accounts payable
Amortization of discount on bonds payable
Increase in salaries payable
Increase in prepaid expenses
Subsidiary loss under the equity method
Gain on disposal of equipment
Decrease in accounts receivable
Increase in deferred tax liability
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