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

Question

Quizplus · Accepted Answer

In the indirect method of preparing cash flows from operating activities, decreases in current liability balances are deducted from net income. This is because a decrease in a current liability indicates that cash was used to reduce the liability, which is an outflow of cash from operating activities.

In Preparing Cash Flows Provided by Operating Activities Using the Indirect