When converting net income to net cash provided by operating activities on the statement of cash flows,indirect method,which of the following is NOT added to net income?
A)gain on sale of land
B)decrease in inventory
C)decrease in accounts receivable
D)depreciation expense

Question

Quizplus · Accepted Answer

The gain on sale of land is a non-operating activity and is not related to the company's day-to-day operations, therefore it is not added back to net income when converting to net cash provided by operating activities using the indirect method. The other choices, B) decrease in inventory, C) decrease in accounts receivable, and D) depreciation expense, are all adjustments that need to be made to reconcile net income to net cash provided by operating activities.

When Converting Net Income to Net Cash Provided by Operating