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

Question

Quizplus · Accepted Answer

Depreciation expense would be added to net income using the indirect method because it is a non-cash expense that reduces net income but does not affect cash flow. Increases in accounts receivable and decreases in accounts payable would be subtracted from net income, and an increase in prepaid expenses would have no effect on net income when using the indirect method.

Which of the Following Would Be Added to Net Income