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)Increases in current asset balances
C)Losses on investing and financing transactions
D)Increases in current liability balances

Question

Quizplus · Accepted Answer

Increases in current asset balances are deducted from net income when preparing cash flows from operating activities using the indirect method. This is because an increase in current assets represents a use of cash, which does not reflect cash provided by operating activities.

In Preparing Cash Flows Provided by Operating Activities Using the Indirect