Which of the following statements is incorrect regarding the use of the indirect method when preparing the operating activities of the statement of cash flows?
A) A decrease in accounts payable is deducted from net income
B) A decrease in prepaid insurance is added to net income
C) Gain on the retirement of bonds is deducted from net income
D) Depreciation expense is subtracted from net income

Question

Quizplus · Accepted Answer

Depreciation expense is added to net income in the indirect method, not subtracted, because it is a non-cash expense.

Which of the Following Statements Is Incorrect Regarding the Use