Which of the following items would be subtracted from net income when using the indirect method of calculating cash flows provided by operating activities?
A)A gain on the sale of equipment
B)Repayment of debt
C)Receipt of cash dividends
D)A gain on the sale of equipment and repayment of debt,but not receipt of cash dividends

Question

Quizplus · Accepted Answer

Under the indirect method of calculating cash flows provided by operating activities, gains on the sale of equipment are added back to net income, while losses are subtracted. Therefore, A is incorrect. Repayment of debt is not added or subtracted from net income, but it is included as a cash outflow in the operating activities section. Therefore, B is correct. Receipt of cash dividends is also not subtracted from net income but is included as a cash inflow in the operating activities section. Therefore, C is incorrect. Therefore, the correct choice is B.

Which of the Following Items Would Be Subtracted from Net