Using the indirect method for preparing the statement of cash flows,which of the following would not be included as an adjustment to net income?
A)A decrease in Prepaid Insurance.
B)An increase in Accounts Payable.
C)An increase in Equipment.
D)An increase in Accounts Receivable.
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

An increase in Equipment is a non-cash transaction and therefore would not be included as an adjustment to net income. The other options all involve changes in cash balances and would require adjustments to net income when preparing the indirect cash flow statement.

Using the Indirect Method for Preparing the Statement of Cash