Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method?
A) depreciation expense
B) an increase in inventory
C) a gain on the sale of equipment
D) dividends declared and paid

Question

Quizplus · Accepted Answer

Depreciation expense is added back to net income in the indirect method of calculating cash flows from operating activities because it is a non-cash expense that reduces net income but does not affect cash flow.

Which of the Following Should Be Added to Net Income