When preparing the operating activities section of a statement of cash flows using the indirect method,
A) depreciation and amortization expenses should be subtracted from net income.
B) increases in current assets should be added to net income.
C) gains from sale of plant, property, and equipment should be added to net income.
D) decreases in current liabilities should be subtracted from net income.
E) both b and d are correct.

Question

Quizplus · Accepted Answer

In the indirect method, depreciation and amortization are added back to net income, increases in current assets are subtracted, gains from sales are subtracted, and decreases in current liabilities are subtracted from net income.

When Preparing the Operating Activities Section of a Statement of Cash