Which of the following is a way that the Operating Activity section of the statement of cash flows adjusts Net Income from the balance sheet?
A)It subtracts all expenses and costs related to the firm's operating activities.
B)It adds all non-cash entries related to the firm's operating activities.
C)It adds the cash that flows from investors to the firm.
D)It removes the cash used for investment purposes.
E)It adds cash received from investments.

Question

Quizplus · Accepted Answer

The Operating Activity section of the statement of cash flows adds all non-cash entries related to the firm's operating activities, such as depreciation or amortization expenses, and adjusts Net Income from the balance sheet to show the actual cash flow generated or used by the firm's operations. Option A is incorrect because it only subtracts expenses and costs, not non-cash entries. Option C and E are incorrect because they relate to financing and investing activities, respectively, which are reported in separate sections of the statement of cash flows. Option D is incorrect because it refers to cash flow from investing activities, not operating activities.

Which of the Following Is a Way That the Operating