Which of the following statements are false when using the indirect method?
A)A loss on the sale of equipment is added to net income in calculating cash provided by operating activities.
B)An increase in accounts receivable during a period is deducted from net income in calculating cash provided by operating activities.
C)An increase in accounts payable during a period is added to net income in calculating cash provided by operating activities.
D)A decrease in accumulated depreciation during a period is added to net income in calculating cash provided by operating activities.

Question

Quizplus · Accepted Answer

A decrease in accumulated depreciation is not added to net income in the indirect method of cash flow statement preparation. Accumulated depreciation typically does not decrease, as it represents the total depreciation expense accumulated over the years for assets. If it does decrease, it might be due to asset disposal, but the adjustment in the cash flow statement would relate to the gain or loss on disposal, not adjusting for changes in accumulated depreciation directly.

Which of the Following Statements Are False When Using the Indirect