Which of the following would be subtracted from net income using the indirect method?
A) Depreciation expense
B) An increase in accounts receivable
C) An increase in accounts payable
D) A decrease in prepaid expenses

Question

Quizplus · Accepted Answer

An increase in accounts receivable would be subtracted from net income using the indirect method, as it would indicate that cash was not received for services or products sold during the period, but revenue was still recognized. Depreciation expense, an increase in accounts payable, and a decrease in prepaid expenses would all be added back to net income when using the indirect method.

Which of the Following Would Be Subtracted from Net Income