In determining cash flows from operations under the indirect method, the adjustments to convert net income to cash flow from operations generally involve ____ debit changes in operating working capital accounts.
A)adding
B)subtracting
C)multiplying
D)dividing
E)cannot be determined from the information provided

Question

Quizplus · Accepted Answer

The adjustments to convert net income to cash flow from operations under the indirect method generally involve subtracting increases in current assets, such as accounts receivable and inventory, and adding back decreases in current liabilities, such as accounts payable and accrued expenses. Therefore, the answer is subtracting (B).

In Determining Cash Flows from Operations Under the Indirect Method