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

Question

Quizplus · Accepted Answer

Non-cash expenses such as depreciation are added back to net income because they have reduced net income but do not affect the cash flows from operating activities.

In Preparing Cash Flows Provided by Operating Activities Using the Indirect