In preparing cash flows provided by operating activities using the indirect method, which of the following is deducted from net income?
A)Losses on investing transactions
B)Increases in current asset balances
C)Increases in current liability balances
D)Non-cash expenses such as depreciation

Question

Quizplus · Accepted Answer

Increases in current asset balances are deducted from net income because they represent additional cash tied up in working capital, rather than cash generated from operations.

In Preparing Cash Flows Provided by Operating Activities Using the Indirect