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)Decreases in current asset balances
C)Gains on investing and financing transactions
D)Both non-cash expenses such as depreciation and decreases in current asset balances,but not gains on investing and financing transactions

Question

Quizplus · Accepted Answer

In the indirect method, non-cash expenses like depreciation are added back to net income, and decreases in current asset balances are also added, as they represent cash inflows. Gains on investing and financing transactions are subtracted, not added.

In Preparing Cash Flows Provided by Operating Activities Using the Indirect