Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?
A) an increase in inventory
B) a decrease in accounts payable
C) preferred dividends declared and paid
D) a decrease in accounts receivable

Question

Quizplus · Accepted Answer

A decrease in accounts receivable means that less money is owed to the company, resulting in an increase in cash flow from operating activities. Increases in inventory are subtracted from net income, decreases in accounts payable are added to net income, and preferred dividends declared and paid are subtracted from net income in calculating net cash flow from operating activities using the indirect method.

Which of the Following Should Be Added to Net Income