Using the indirect method of statement of cash flows, which of the following would be added to net income?
A) Depletion expense
B) An increase in accounts receivable
C) A decrease in accounts payable
D) A gain on the sale of property

Question

Quizplus · Accepted Answer

The indirect method of statement of cash flows starts with net income and adjusts for non-cash expenses, changes in working capital, and other items. Depletion expense is a non-cash expense and would be added back to net income. Increases in accounts receivable and decreases in accounts payable would be subtracted from net income as they represent cash inflows that were not received or paid out, respectively. However, a gain on the sale of property represents a cash inflow and would be added to net income.

Using the Indirect Method of Statement of Cash Flows, Which